FAC Explorer

Audit 25407

FY End
2022-12-31
Total Expended
$6.64M
Findings
2
Programs
2
Organization: Cdc Small Business Finance (CA)
Year: 2022 Accepted: 2023-08-31
Auditor: Cohnreznick

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
29497 2022-001 Significant Deficiency - B
605939 2022-001 Significant Deficiency - B

Programs

ALN Program Spent Major Findings
59.046 Microloan Program $5.53M Yes 1
14.218 Community Development Block Grants/entitlement Grants $1.11M Yes 0

Contacts

Name Title Type
MWQJL3KSEYE4 Natalie Gunn Auditee
7036472360 Michael Good Auditor
No contacts on file

Notes to SEFA

Title: Loan/loan guarantee outstanding balances Accounting Policies: The accompanying schedule of expenditures of federal awards (the "schedule") includes the federal award activity of CDC Small Business Finance Corp. ("CDC") under programs of the federal government for the year ended December 31, 2022. The information is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ("Uniform Guidance"). Because the Schedule presents only a selected portion of the operations of CDC, it is not intended to and does not present the financial position, changes in net assets or cash flows of CDC. Expenditures reported in the Schedule are reported on the accrual basis of accounting. When applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. No federal financial assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: CDC has not elected to use the 10% de minimus cost rate as allowed under the Uniform Guidance. MICROLOAN PROGRAM (59.046) - Balances outstanding at the end of the audit period were 310369. MICROLOAN PROGRAM (59.046) - Balances outstanding at the end of the audit period were 470870. MICROLOAN PROGRAM (59.046) - Balances outstanding at the end of the audit period were 733531. MICROLOAN PROGRAM (59.046) - Balances outstanding at the end of the audit period were 1814814.
Title: Microloan Program Accounting Policies: The accompanying schedule of expenditures of federal awards (the "schedule") includes the federal award activity of CDC Small Business Finance Corp. ("CDC") under programs of the federal government for the year ended December 31, 2022. The information is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ("Uniform Guidance"). Because the Schedule presents only a selected portion of the operations of CDC, it is not intended to and does not present the financial position, changes in net assets or cash flows of CDC. Expenditures reported in the Schedule are reported on the accrual basis of accounting. When applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. No federal financial assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: CDC has not elected to use the 10% de minimus cost rate as allowed under the Uniform Guidance. The Microloan Program represents a program under which the CDC periodically applies for and receives loan proceeds from the Small Business Administration ("SBA") (revolving loan pools) that are used to make microloans to eligible micro-borrowers. These microloans are made in accordance with guidance set forth by the SBA under its Standard Operating Procedures ("SOP") and require CDC to meet continuing compliance and reporting requirements. In addition, each fiscal year, CDC applies for and receives approval for grant funding to be paid on a reimbursement basis for specific technical assistance-related expenses incurred by the CDC with respect to the Microloan Program.
Title: Community Development Block Grant ("CDBG") Program Accounting Policies: The accompanying schedule of expenditures of federal awards (the "schedule") includes the federal award activity of CDC Small Business Finance Corp. ("CDC") under programs of the federal government for the year ended December 31, 2022. The information is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ("Uniform Guidance"). Because the Schedule presents only a selected portion of the operations of CDC, it is not intended to and does not present the financial position, changes in net assets or cash flows of CDC. Expenditures reported in the Schedule are reported on the accrual basis of accounting. When applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. No federal financial assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: CDC has not elected to use the 10% de minimus cost rate as allowed under the Uniform Guidance. For the year ended December 31, 2022, the City of San Diego approved and entered into an agreement with CDC and with Bankers Small Business CDC ("Bankers") to initiate and implement a Citywide Economic Development Impact Program. This agreement is a Small Business Revolving Loan and Business Advising Services Agreement under which the CDC is a subrecipient of federal monies from the Department of Housing and Urban Development ("HUD") under the CDBG Program, passed-through the City of San Diego. The Revolving Loan Fund is intended to provide small business loans for eligible borrowers, and for eligible purpose, within the City of San Diego, with Bankers Small Business CDC providing 50% of loan funding disbursed. The Business Assistance Fund is intended to cover CDC's expenses related to identifying eligible borrowers through approved business partners, and to provide business and technical advice assistance to borrowers or potential borrower within the City of San Diego.

Finding Details

Finding 2022-001
Section III - Federal Awards Findings Finding 2022-001 Federal Agency: U.S. Small Business Administration Federal Program Title: Microloan Technical Assistance Program Federal Assistance Listing Number: 59.046 Compliance Requirements: Allowable costs/Cost Principles Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: According to 2 CFR, Part 200.430(i)(1) of the Office of Management and Budget's Uniform Guidance, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed which must, among other things be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition The Organization was reporting budgeted hours in the quarterly reimbursement requests rather than actual hours worked for the Technical Assistance Microloan Program. Context: A sample of 3 employees were selected from a population of 22 employees. We identified exceptions in 1 out of the 3 employees' timecards we tested. One employee charged budgeted hours to their timecard as opposed to actual hours. This caused CDC to overcharge the program by $5,879. Cause: Insufficient supervisor review led to supervisors approving budgeted time as opposed to actual time. Effect or Potential Effect: CDC Small Business Finance Corp. was not in compliance with the terms and conditions of the award, nor with the allowable costs/cost principle requirement of the Uniform Guidance. Questioned Costs: N/A Identification as a Repeat Finding This finding is not a repeat finding. Auditor's Recommendation: CDC should ensure that supervisors have adequate training to properly review employee timecards to ensure that actual hours worked are appropriately charged to the Technical Assistance Program. Views of Responsible Officials CDC's management performed a review of all payroll charges submitted to the U.S. Small Business Administration ("SBA") in relation to the Microloan Technical Assistance Program and noted that CDC had been overcharging the SBA for multiple years. CDC's management notified the SBA of the discrepancy and worked with the SBA to determine the amount to reimburse the SBA. The SBA accepted the reimbursement as well as management's proposed resolution.
Finding 2022-001
Section III - Federal Awards Findings Finding 2022-001 Federal Agency: U.S. Small Business Administration Federal Program Title: Microloan Technical Assistance Program Federal Assistance Listing Number: 59.046 Compliance Requirements: Allowable costs/Cost Principles Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: According to 2 CFR, Part 200.430(i)(1) of the Office of Management and Budget's Uniform Guidance, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed which must, among other things be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition The Organization was reporting budgeted hours in the quarterly reimbursement requests rather than actual hours worked for the Technical Assistance Microloan Program. Context: A sample of 3 employees were selected from a population of 22 employees. We identified exceptions in 1 out of the 3 employees' timecards we tested. One employee charged budgeted hours to their timecard as opposed to actual hours. This caused CDC to overcharge the program by $5,879. Cause: Insufficient supervisor review led to supervisors approving budgeted time as opposed to actual time. Effect or Potential Effect: CDC Small Business Finance Corp. was not in compliance with the terms and conditions of the award, nor with the allowable costs/cost principle requirement of the Uniform Guidance. Questioned Costs: N/A Identification as a Repeat Finding This finding is not a repeat finding. Auditor's Recommendation: CDC should ensure that supervisors have adequate training to properly review employee timecards to ensure that actual hours worked are appropriately charged to the Technical Assistance Program. Views of Responsible Officials CDC's management performed a review of all payroll charges submitted to the U.S. Small Business Administration ("SBA") in relation to the Microloan Technical Assistance Program and noted that CDC had been overcharging the SBA for multiple years. CDC's management notified the SBA of the discrepancy and worked with the SBA to determine the amount to reimburse the SBA. The SBA accepted the reimbursement as well as management's proposed resolution.