Report 11-10 - Management Advisory on the Records Management and Documentation Process at the Disaster Loan Servicing Centers

This report discusses issues identified during three recent audits (1) OIG Report 10-01, Monitoring of Insurance Coverage for Disaster Loan Recipients, (2) OIG Report 11-07, Processing of Recovery Checks at the Disaster Loan Servicing Centers, and (3) Release of Collateral by Loan Servicing Centers, which were conducted at the Birmingham and El Paso Disaster Loan Servicing Centers.  The audits revealed that the servicing centers were not retaining all of the records necessary to ensure adequate and proper documentation for a complete audit trail, or providing justification for many actions taken.  Additionally, the electronic recordkeeping system was missing many records associated with active loans and lacked the capability to easily locate and retrieve records.

The servicing centers lack a clearly defined records management and documentation process, and therefore, did not consistently make and preserve records containing adequate and proper documentation as statutorily required. Records that should have been preserved because they contained evidence of agency activities, or information of value to the agency, were not systematically maintained. Additionally, the electronic recordkeeping system did not contain all of the controls specified in federal regulations. The deficiencies in the servicing center records management and documentation process create a risk that the Agency may be unable to furnish information necessary to protect the legal and financial rights of the Government and of persons directly affected by the Agency's activities. These deficiencies undermine the Agency's ability to operate efficiently and economically.