Business Regulation and Consumer Protection:

Survey of the Small Business Administration's Accounting for Loan Guaranty Fees

AFMD-82-79: Published: May 14, 1982. Publicly Released: Dec 21, 1983.

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GAO surveyed the Small Business Administration's (SBA) Loan Accounting System, which processes loan guarantee fees.

The survey showed that information in the Loan Accounting System was not accurate. The system carried over $2 million in delinquent guaranty fees, but a review showed that the fees had already been paid or that they were no longer applicable because the related loans had been cancelled. Because the accounting system was not producing reliable information, managers maintained manual memorandum records to account for guaranty fee collections and to initiate followup on delinquent fees, a duplicative and costly process. SBA field offices found that 64 percent of the fees shown as due the government had been paid but had not been recorded in the system. The remaining 36 percent of the fees should have been deleted from the system because the loans, although approved, were not made. SBA has identified the necessary changes to the automated billing segment of the system. It is important that these changes be quickly implemented and thoroughly tested so that SBA will be able to more efficiently and effectively manage the guaranty fees and realize significant savings by eliminating manual memorandum records.

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