Audit 341180

Federal Programs: U.S Department of Commerce Economic Development Cluster Economic Adjustment Assistance – CARES Act – COVID - 19 CFDA 11.307 Compliance requirement: 13 CFR section 307.14 states that the revolving loan fund recipients must certify that the information provided is complete and accurate. Condition: During our testing of reporting, we tested the annual report to ensure numbers were accurate and supported by amounts in the general ledger. During this testing, we noted a variance between what was reported and what the actual amounts were. Cause: The interest income for the bank was incorrectly recorded in the wrong class and certain late fees on loan payments were not reflected in the appropriate account. Effect: The breakdown of internal controls in this area could adversely affect accurately reporting income amounts for the revolving loan funds. Questioned Costs: None Context: Reporting is done by using the prior year’s reported amounts and then adding in the activity from the current year. By misclassifying income, amounts were not accurately reported in the Form ED-209 Revolving Loan Fund Financial Report. Recommendation: Procedures should be implemented to ensure that interest income is appropriately classified based on the funds that are earning those amounts and that late fees are accurately reflected as well. Views of responsible officials: Management is in agreement and will implement a corrective action plan on page 30.

Federal Programs: U.S Department of Commerce Economic Development Cluster Economic Adjustment Assistance – CARES Act – COVID - 19 CFDA 11.307 Compliance requirement: 13 CFR section 307.14 states that the revolving loan fund recipients must certify that the information provided is complete and accurate. Condition: During our testing of reporting, we tested the annual report to ensure numbers were accurate and supported by amounts in the general ledger. During this testing, we noted a variance between what was reported and what the actual amounts were. Cause: The interest income for the bank was incorrectly recorded in the wrong class and certain late fees on loan payments were not reflected in the appropriate account. Effect: The breakdown of internal controls in this area could adversely affect accurately reporting income amounts for the revolving loan funds. Questioned Costs: None Context: Reporting is done by using the prior year’s reported amounts and then adding in the activity from the current year. By misclassifying income, amounts were not accurately reported in the Form ED-209 Revolving Loan Fund Financial Report. Recommendation: Procedures should be implemented to ensure that interest income is appropriately classified based on the funds that are earning those amounts and that late fees are accurately reflected as well. Views of responsible officials: Management is in agreement and will implement a corrective action plan on page 30.