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AFMD-82-79 1 (1982-05-14)

handle is hein.gao/gaobabkkk0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 ACCOUNTING AND FINANCIAL MANAGEMmENT DiVisION Mr. Harry S. Carver 089255 Controller, Small Business Administration Dear Mr. Carver: Subject: Survey of the Small Business Administration's Accounting for Loan Guaranty Fees (GAO/AFMD-82-79) Our survey of the Small Business Administration's (SBA's) ac- counting for loan guaranty fees showed that information in its automated Loan Accounting System was not accurate. The accounting system carried over $2 million in delinquent guaranty fees, but a review of these receivables showed the system was wrong. The fees had already been paid or the related loans canceled and the fees no longer applicable. Because the Loan Accounting System was not producing reliable information, managers maintained manual memoran- dum records to account for guaranty fee collections and to initi- ate followup on delinquent fees--a duplicative and costly process. SBA was established primarily to aid small businesses--those businesses not dominant in their field. SBA makes direct loans or guarantees loans made by participating lending institutions. Loan agreements obligate the Government to purchase the guaranteed por- tion of the loan (not over 90 percent of the balance outstanding) from the lending institution if the repayment of principal or in- terest is in default for over 90 days. Depending on the type of guaranteed loan, the participating lender must pay the Government a one-time guaranty fee of either one-fourth of a percent or one percent of the guaranteed portion of the loan. The fee is payable when the loan is disbursed or 90 days following loan approval, whichever is earlier. The lender sends the fee to SBA's Financial Operations Division in Denver, where an automated billing system was established in 1978 as part of the Loan Accounting System. If the guaranty fee is not paid within 90 days, the billing system sends the lender a notice of the amount due and the loan number. If, after 60 more days, the fee still is not paid,.,a sec- ond notice is sent to the appropriate SBA field office. The field office determines it the 'fee has been paid -and, if not, forwards a copy of-the notice -to te lending institution. Then,. if the fee is not paid with'in 15 days, the. cuarantee Iature. is terminated. I S (901342) ' o ' °, ..... . . . . , -' _, , _ ., . %t , .: ¢ ..: . . , * , . - - *V+ -. • + Q ,t • + ,'+ '• . ,,ot At~*. -. . . -I *~ . --I

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