Finding Text
Federal Agency: United States Small Business Administration Program Name: Economic Injury Disaster Loan Federal Assistance Listing Number - 59.008 Criteria: The loan agreement includes specific provisions regarding the timely filing of certain documentation with the lender as follows: (1) Within 180 days of loan authorization, the borrower must provide proof of an active and in effect hazard insurance policy that includes fire, lightning, and extended coverage on all items used to secure the loan to at least 80% of the insurable value, and (2) Within three (3) months subsequent to the borrower?s fiscal year-end, the borrower must provide financial statements to the lender in such form as the lender may require. Condition and Context: During our audit, it was noted that internal controls were not sufficient to ensure that the documentation was filed in a timely manner as required by the terms of the loan agreement. Cause: Management is aware of these filing requirements; however, due to staffing issues and other matters related to correspondence with the lender, the documentation was erroneously not filed in the manner prescribed. Effect: Without proper and timely filing of required documentation with the lender, the entity may not be in compliance with the loan agreement. Recommendation: Develop sufficient internal controls to ensure that all lender filing requirements are identified and filings made in a timely manner. Additionally, the entity should file the required documentation with the lender as soon as is feasible. Views of Management: Management agrees with the finding and is implementing procedures that are further discussed in the corrective action plan. See Corrective Action Plan.