Finding Text
Finding Type: Immaterial noncompliance with major program requirements Title and ALN of Federal Program: 10.870 – United States Department of Agriculture Rural Microentrepreneur Assistance Program (USDA RMAP) Finding Resolution Status: In review. Information on Universe and Population Size: Loans disbursed during the period July 1, 2024 to June 30, 2025 from USDA RMAP loan fund. There were 8 unique loans disbursed totaling $227,000. Sample Size Information: All 8 loans were selected for testing eligibility compliance. Identification of Repeat Finding and Finding Reference Number: N/A Criteria: USDA RMAP is governed by 7 CFR part 4280, subpart D, which requires that loans made from the RMAP revolving loan fund be provided to eligible microentrepreneurs located in rural areas as defined in the regulations and the approved work plan for the award. These regulations, together with the Organization’s USDA RMAP agreement and approved work plan, require that loans be made only within the approved rural service area. In addition, 2 CFR 200.303 requires the auditee to establish and maintain effective internal control over compliance with federal statutes, regulations, and the terms and conditions of federal awards, including eligibility requirements for RMAP loan recipients. Statement of Condition: During eligibility testing of loan disbursements under the RMAP program, one of eight disbursements tested was made to a borrower located outside of the eligible area. The loan was disbursed in fiscal year 2025 for $10,000. Cause: Management did not verify the borrower’s business address against the approved rural service area map prior to disbursement. Effect or Potential Effect: Disbursement of RMAP loan funds to an ineligible borrower constitutes noncompliance with program eligibility requirements and may result in questioned costs of $10,000. Auditor Noncompliance Code: E – Eligibility Reporting Views of Responsible Officials: Management agrees with the noncompliance with no sanctions imposed conclusion. Context: No additional context identified by the Organization which is not otherwise presented herein. Recommendation: The Organization should strengthen eligibility review controls over RMAP loan disbursements by implementing procedures to verify and document that each borrower’s business location is within the approved service area prior to loan approval and disbursement. Auditor’s Summary of the Auditee’s Comments on the Findings and Recommendations: The Organization concurs with the finding and states that it will enhance its RMAP loan review procedures to ensure borrower locations are verified and documented as being within the approved rural service area prior to loan approval and disbursement. Response Indicator: Agree Completion Date: In process. Response: Management acknowledges noncompliance in the current fiscal year and is reviewing its internal controls over loan disbursements. Questioned Costs: $10,000