REDEC AND REDEC RELENDING CORPORATION

Federal Award Findings and Questioned Costs Finding: 2024-001 Issue: U.S. Small Business Administration Microloan Program (ALN 59.046) Reporting Criteria: The U.S. SBA loan guide requires forms SF 270 and SF425 be submitted within 30 days from the ending date of each quarter. Condition: Forms SF 270 SF 425 were submitted on December 11, 2024. Cause: The filing was missed with this task being shifted to the Business Manager after the Presidents retirement in July 2024. Effect or Potential Effect: The Corporations' were not in compliance with U.S. SBA documentation requirement. Questioned Costs: None. Context: Forms SF 270 and SF 245 were not filed within 30 days. Repeat Finding: This finding is not a repeat finding. Recommendation: We recommend that management ensures all forms be submitted timely as required by the U.S. SBA. Management Response: Reports were submitted late due to staff turnover. Former president who submitted reports retired 8/1/2024, the new president failed to submit the reports before resigning in early November. Currently there is one staff person at REDEC, the Business Manager, and an Administrator (consultant part time). The Business Manager will be trained by the consultant to submit reports when due. New hires will be cross trained so more than one person will learn/ know how to submit reports on the U.S. SBA’s complex reporting software system based in Excel. All reports have been subsequently submitted and accepted.

Criteria: The U.S. SBA loan guide specifics the required forms and documents that are to be kept for review of all loan files administered by the Corporations. Additionally, all required forms and documents must be kept for review for at least six years. Condition: At September 30, 2023, one loan file examined was missing three required documents Cause: The three required forms were not completed by the borrower and retained by the Corporation in the loan file. Effect or Potential Effect: The Corporations' were not in compliance with U.S. SBA documentation requirement. Questioned Cost: None. Context: Of the 9 loan files tested, only 1 file was missing documents; in total that one file was missing 3 documents. Repeat Finding: This finding is not a repeat finding. Recommendation: We recommend that management ensures all loan files contain all documents required by the U.S. SBA. Management Response: The deficient loan file was a particularly complicated file but management agrees that all SBA required documents should be in kept in the loan files and will work on ensuring all documents are maintained in loan files going forward.

GSA_MIGRATION