Finding Text
Condition and Criteria: During the current year, the Agency awarded a loan from its Economic Development Loan Fund to a corporation for the purpose of acquiring stock from former owners. 13 CFR Section 307.17(c)(4) prohibits lending for such purpose unless sufficient justification as outlined in the Section is provided in the loan
documentation.
Cause: The Agency failed to document the justification that it relied upon as an exception to the restriction to lend funds for the acquisition of stock.
Questioned Cost: The loan awarded was $1 million.
Auditor’s Recommendation: We recommend that the Agency’s Board of Director’s document the justification and approval for the exception to the Federal requirement related to stock acquisition.