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GAOUnited States General Accounting Office

Financial Management Series

March 2001 GUARANTEED LOAN SYSTEM REQUIREMENTS

Checklist for Reviewing Systems Under the Federal Financial Management Improvement Act

GAO-01-371G

Form SF298 Citation Data

Report Date("DD MON YYYY") 00MAR2001

Report TypeN/A

Dates Covered (from... to)("DD MON YYYY")

Title and Subtitle GUARANTEED LOAN SYSTEM REQUIREMENTS Checklistfor Reviewing Systems Under the Federal FinancialManagement Improvement Act

Contract or Grant Number

Program Element Number

Authors Project Number

Task Number

Work Unit Number

Performing Organization Name(s) and Address(es) General Accounting Office,PO Box 37050, Washington, DC 20013

Performing Organization Number(s) GAO-01-371g

Sponsoring/Monitoring Agency Name(s) and Address(es) Monitoring Agency Acronym

Monitoring Agency Report Number(s)

Distribution/Availability Statement Approved for public release, distribution unlimited

Supplementary Notes

Abstract The Federal Financial Management Improvement Act (FFMIA) of 1996 requires, among other things, thatagencies implement and maintain financial management systems that substantially comply with federalfinancial management system requirements. These requirements are detailed in the Federal FinancialManagement System Requirements series issued by the Joint Financial Management ImprovementProgram (JFMIP), in Office of Management and Budget (OMB) Circular A-127, Financial ManagementSystems, and in OMBs Revised Implementation Guidance for the Federal Financial ManagementImprovement Act (FFMIA) of 1996, issued January 4, 2001. JFMIP intends for the requirements topromote understanding of key financial management systems concepts and requirements, to provide aframework for establishing integrated financial management systems to support program and financialmanagers, and to describe specific requirements of financial management systems.

Subject Terms

Document Classification unclassified

Classification of SF298 unclassified

Classification of Abstract unclassified

Limitation of Abstract unlimited

Number of Pages 98

GAO-01-371G – Guaranteed Loan System Requirements Checklist (3/01)

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PREFACE

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March 2001

The Federal Financial Management Improvement Act (FFMIA) of 1996 requires, amongother things, that agencies implement and maintain financial management systems thatsubstantially comply with federal financial management system requirements. Theserequirements are detailed in the Federal Financial Management System Requirementsseries issued by the Joint Financial Management Improvement Program (JFMIP), inOffice of Management and Budget (OMB) Circular A-127, Financial Management Systems,and in OMB’s Revised Implementation Guidance for the Federal Financial ManagementImprovement Act (FFMIA) of 1996, issued January 4, 2001. JFMIP intends for therequirements to promote understanding of key financial management systems conceptsand requirements, to provide a framework for establishing integrated financialmanagement systems to support program and financial managers, and to describespecific requirements of financial management systems.

We are issuing this checklist that reflects JFMIP’s revised Guaranteed Loan SystemRequirements (March 2000) to assist (1) agencies in implementing and monitoring theirguaranteed loan systems and (2) managers and auditors in reviewing agency guaranteedloan systems to determine if they substantially comply with FFMIA. This checklist is notrequired to be used in assessing guaranteed loan systems. Rather, it is provided as a toolfor use by experienced staff and is one in a series of documents we have issued to assistagencies in improving or maintaining effective operations. (See the last page of thisdocument for a list of related products.) This checklist, the JFMIP source document, andthe two previously mentioned OMB documents should be used concurrently. Those usingthis tool must apply experienced judgment in its interpretation and application. Theymust consider the impact of the completed checklist on an entire guaranteed loan systemand whether the system, as a whole, substantially complies with requirements.

Additional copies of the checklist can be obtained from the U.S. General AccountingOffice, 700 4th Street NW, Room 1100, Washington, DC 20548, or by calling (202) 512-6000, or TDD (202) 512-2537. This checklist replaces GAO’s previously issued exposuredraft of the Guaranteed Loan System Requirements Checklist (GAO/AIMD-21.2.7, August2000) and is available on the Internet on GAO’s Home Page (www.gao.gov) under “OtherPublications, Accounting and Financial Management.” Hard copies of the JFMIPdocument also can be obtained from GAO or can be downloaded from the JFMIP websiteat JFMIP.gov under “JFMIP Documents, System Requirements.”

Jeffrey C. SteinhoffManaging DirectorFinancial Management and Assurance

http://www.gao.gov/


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CONTENTS

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Overview 4Authoritative Guidance 5How to Use This Checklist 6

Guaranteed Loan System Requirements 8System Overview 10Introduction to Functional Requirements 22Lender Management 23Guarantee Extension and Maintenance 32Portfolio Management 46Acquired Loan Servicing 58Delinquent Debt Collection/Troubled Debt Servicing 70Treasury Cross-Servicing 85Other Reporting Requirements 90Records Retention 91

Related Products 93

Figure

Figure 1: Agency Systems Architecture 4

Abbreviations

CAIVRS Credit Alert Interactive Voice Response SystemCFO chief financial officerCM configuration managementCOTS commercial off-the-shelfDOJ Department of JusticeFCRA Federal Credit Reform ActFFMIA Federal Financial Management Improvement ActFMFIA Federal Managers’ Financial Integrity ActFMS Financial Management ServiceIRS Internal Revenue ServiceJFMIP Joint Financial Management Improvement ProgramNPR National Performance ReviewOGC Office of the General CounselOMB Office of Management and BudgetOPM Office of Personnel ManagementSF standard formsSFFAS Statement of Federal Financial Accounting StandardsSSN Social Security NumberTIN taxpayer identification numberTOP Treasury offset program


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OVERVIEW

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The Federal Financial Management Improvement Act (FFMIA) of 1996 requires, amongother things, that agencies implement and maintain financial management systems thatsubstantially comply with federal financial management system requirements. Thesesystem requirements are detailed in the Federal Financial Management SystemsRequirements series issued by the Joint Financial Management Improvement Program(JFMIP)1 and Office of Management and Budget (OMB) Circular A-127, FinancialManagement Systems. JFMIP requirements documents describe the federal financialsystem architecture as (1) core financial system, (2) managerial cost accounting, and(3) 13 subsidiary or mixed systems supporting agency operations, not all of which areapplicable to all agencies.2 Figure 1 is the JFMIP model that illustrates how these systemsinterrelate in an agency's overall systems architecture.

Figure 1: Agency Systems Architecture

Source: JFMIP Guaranteed Loan System Requirements (March 2000).

1JFMIP is a joint cooperative undertaking of OMB, the General Accounting Office, theDepartment of Treasury, and the Office of Personnel Management (OPM), working incooperation with each other and with operating agencies to improve financialmanagement practices throughout the government. The program was initiated in 1948 bythe Secretary of the Treasury, the Director of the Bureau of the Budget (now OMB), andthe Comptroller General and was given statutory authorization in the Budget andAccounting Procedures Act of 1950. The Civil Service Commission, now the Office ofPersonnel Management, joined JFMIP in 1966.2JFMIP has also issued the Framework for Federal Financial Management Systems(FFMSR-0, January 1995) that defines the framework for establishing and maintainingfinancial management systems to support management and deliver programs of thefederal government. GAO published a companion checklist, Framework for FederalFinancial Management System Checklist (GAO/AIMD-98-21.2.1, May 1998).


To date, JFMIP has issued 10 of the 15 functional requirements. (See figure 1.) 3

We are issuing this checklist–which reflects JFMIP’s revised Guaranteed Loan SystemRequirements (March 2000)--to assist (1) agencies in implementing and monitoring theirguaranteed loan systems and (2) managers and auditors in reviewing agency guaranteedloan systems to determine if they substantially comply with FFMIA. This checklist is nota requirement. However, it is provided as a tool for use by experienced staff. Thischecklist; the JFMIP source document; OMB Circular A-127, Financial ManagementSystems; and OMB’s Revised Implementation Guidance for the Federal FinancialManagement Improvement Act (FFMIA) of 1996, issued January 4, 2001, should be usedconcurrently. Staff members who use this tool must apply experienced judgment in itsinterpretation and application. They must consider the impact of the completed checkliston the entire guaranteed loan system and whether the system, as a whole, substantiallycomplies with requirements.

Authoritative Guidance

OMB Circular A-127 and OMB’s implementation guidance provide the basis for assessingcompliance with FFMIA requirements which agencies use in order to implement andmaintain financial management systems that comply substantially with federalrequirements. The implementation guidance identifies various criteria that an agencymust meet to substantially comply with these requirements. One of the criteria listed inthe OMB guidance is the JFMIP system requirements series.

The source of all the questions in this checklist is the JFMIP Guaranteed Loan SystemRequirements (JFMIP-SR-00-01, March 2000). This document provides high-levelfunctional requirements for guaranteed loan systems that will provide the capability forfinancial managers and others to control and account for guaranteed loan program assets,liabilities, and resources as defined in governmentwide and agency-specific statutes,regulations, and guidelines. The March 2000 document is an update of the December1993 JFMIP Guaranteed Loan System Requirements document. The primary purposes ofthis update are to reflect (1) changes in statutes, regulations, and technology that haveoccurred since the document was originally published (e.g., passage of the ChiefFinancial Officers Act of 1990, FFMIA of 1996), (2) changes brought about by the NationalPerformance Review (NPR), and (3) increased availability of commercial off-the-shelf(COTS) software packages. It should be noted that the checklist is based on the existingpublished JFMIP standards and that changes in laws, regulations, and standards andpractices since the standards were issued are not included in the checklist.

The revised JFMIP document segregates functional requirements into two generalcategories–mandatory and value-added. The mandatory requirements describe what thesystem must do. They consist of the minimum acceptable functionality necessary toestablish a system and are based on federal laws and regulations. Mandatoryrequirements are those against which agency heads evaluate their systems to determine

3Thus far, the series includes the (1) Core Financial System Requirements, (2) InventorySystem Requirements, (3) Seized Property and Forfeited Assets System Requirements,(4) Direct Loan System Requirements, (5) Guaranteed Loan System Requirements,(6) Travel System Requirements, (7) Human Resources & Payroll Systems Requirements,(8) System Requirements for Managerial Cost Accounting, (9) Grant Financial SystemRequirements, and (10) Property Management Systems Requirements.


substantial compliance with system requirements under FFMIA. These requirementsapply to existing systems in operation and new systems planned or under development.The checklist uses “(M)” immediately following the question to indicate that it ismandatory for the system to do that.

The value-added requirements describe optional features and may consist of anycombination of the following: (1) using state-of-the-art technology, (2) employingpreferred or best business practices, or (3) meeting the special management needs of anindividual agency. Agencies should consider value-added features when judging systemsoptions. The need for these value-added features in agency systems is left to thediscretion of each agency head. The checklist uses “(V)” immediately following thequestion to indicate that the item is value-added and not mandatory.

How to Use This Checklist

OMB’s 2001 implementation guidance provides chief financial officers (CFO) andinspectors general with a means for determining whether their agencies’ financialmanagement systems substantially comply with federal financial management systemrequirements. The annual reporting required by 31 U.S.C. 3512(d) is one means ofassisting agencies in the determination of substantial compliance. Agencies can also usethis checklist as a tool to help determine compliance with federal financial managementsystem requirements.

Completing this checklist will allow agencies to systematically determine whetherspecific systems requirements are being met. In determining substantial compliance,agencies should assess the results of the completed checklist on the guaranteed loansystem requirements taken as a whole.

The checklist contains three columns with the first citing the question. Use the secondcolumn to answer each question “yes,” “no,” or “na.” Use the third column to explainyour answer. A “yes” answer should indicate that the agency’s guaranteed loan systemprovides for the capability described in the question. For each “yes” answer, the thirdcolumn should contain a brief description of how the guaranteed loan system satisfiesthat capability and should also refer to a source that explains or shows the capability.

A “no” answer indicates that the capability does not exist. For a “no” answer, the thirdcolumn should provide an explanation and, where applicable, a reference to any relatedsupporting documentation (e.g., the agency is working on modifying or implementing itsguaranteed loan system to have the capability available in subsequent years; managementbelieves the capability is not cost effective and will not enhance the guaranteed loansystem’s ability to manage operations). Cost-benefit studies, or other reasoning, thatsupports a “no” answer should be identified in the explanation column. If there are nocost-benefit studies or other support, a full explanation should be provided.

“No” answers should not be viewed individually or taken out of context. Rather, “no”answers should be assessed as to their impact on the overall guaranteed loan system andthe extent to which the “no” answers inhibit the entire guaranteed loan system frommeeting substantial compliance.


Certain questions within the checklist may not be applicable to the agency. Answer suchnonapplicable question(s) with “na” and provide an appropriate explanation in the thirdcolumn.


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GUARANTEED LOAN SYSTEM REQUIREMENTS

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The guaranteed loan system requirements document provides an overview of guaranteedloan system requirements (the checklist questions for this area are drawn from pages10–-17 of the JFMIP source document); introduction to functional requirements (thechecklist questions for this area are drawn from page 20 of the JFMIP source document);and functional requirements for the seven functions described below: (1) lendermanagement,(2) guarantee extension and maintenance, (3) portfolio management, (4) acquired loanservicing, (5) delinquent debt collection, (6) Treasury cross-servicing, and (7) otherreporting requirements and records retention requirements (the checklist questions forthis area are drawn from page 64 of the JFMIP source document).

1. Lender management supports analysis of lenders’ program eligibility and monitorslender performance to ensure that only qualified and financially sound lendersparticipate in federal guaranteed loan programs. (The checklist questions for thisarea are drawn from pages 21–27 of the JFMIP source document.)

2. Guarantee extension and maintenance supports the accounting anddocumentation requirements for the evaluation of the guarantee request, theextension of the guarantee by the federal agency, and the monitoring of theguarantee. (The checklist questions for this area are drawn from pages 28–35 ofthe JFMIP source document.)

3. Portfolio management supports the management and evaluation of the guaranteedloan program and its portfolios of outstanding guaranteed loans and acquiredloans. (The checklist questions for this area are drawn from pages 36–42 of theJFMIP source document.)

4. Acquired loan servicing encompasses the procedures for default claim review andpayment in accordance with guarantee agreements and regulations, as well as theinvoicing and collection procedures for acquired loans and the foreclosure andliquidation of property for collateralized loans acquired by the government. (Thechecklist questions for this area are drawn from pages 43–50 of the JFMIP sourcedocument.)

5. Delinquent debt collection/troubled debt servicing includes the recovery ofdelinquent debt through the use of dunning letters, offset programs, collectionagencies, garnishment of nonfederal wages, litigation, and termination ofcollection action on uncollectible debt. It also includes the foreclosure andliquidation of property for collateralized loans acquired by the government. (Thechecklist questions for this area are drawn from pages 51–58 of the JFMIP sourcedocument.)

6. Treasury cross-servicing occurs when Treasury’s Financial Management Service(FMS) or a Treasury-designated debt collection center provides debt collectionservices for other federal agencies. (The checklist questions for this area aredrawn from pages 59–62 of the JFMIP source document.)


7. Other reporting requirements provides for two types of reporting (1) transactionhistory and (2) external reporting requirements. (The checklist questions for thisarea are drawn from page 63 of the JFMIP source document.)

The checklist questions follow the JFMIP source document. It should be noted that notall questions will apply in all situations and, as with the use of any checklist, professionaljudgment should be exercised. Using the JFMIP source document and its “Appendix B:Glossary,” which defines terms used, along OMB Circular A-127, Financial ManagementSystems, and OMB Revised Implementation Guidance for the Federal FinancialManagement Improvement Act (FFMIA) of 1996, issued January 4, 2001, will help ensurethat the user is cognizant of the background information necessary to fully understandthe questions.

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Guaranteed Loan System Requirements

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Page 11 GAO-01-371G – Guaranteed Loan System Requirements Checklist (3/01)

System overview

Yes/no

na Explanation

1. Does the guaranteed loansystem being designed andimplemented, or in use, operatein accordance with laws,regulations, and judicialdecisions? It is theresponsibility of the agency tobe knowledgeable of the legalrequirements governing itssystem. (M)

2. Do functional requirements notmandated by law, regulation,directive, or judicial decisionresult in cost-effective systemsthat are in the interest of thegovernment? (M)

3. Have all possible alternativesfor meeting the requirementsbeen considered? (M)

4. Has the agency carefullydetermined which value-addedrequirements are necessary foreach credit program? (M)

5. Has the agency developed anefficient, effective, andeconomical strategy forinterfacing, or logicallyintegrating, its guaranteed loansystems (or subsystems) withother systems (or subsystems)that provide information to, orutilize information from,standard guaranteed loansystems? (M)

6. Are the data in optionalprocesses consistent withstandard guaranteed loansystems that contain the officialrecords for the agency? (M)

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System overview

Yes/no

na Explanation

Relationship with other systems

7. Is the system capable ofinterfacing with other financialmanagement systems (e.g., thecore financial system, themanagerial cost accountingsystem, common processes formanaging receivables,capabilities related to collectingdelinquent debt, and theproperty management system)?(M)

8. Does the system interact withthe core financial system toperform fund control checks,initiate or record payments, andrecord the results of otherguaranteed loan-relatedfinancial transactions, andacknowledge receipt offinancial information exchange?(M)

9. Does the system performautomatic system balancing?(M)

10. Does the system balancingensure that guaranty loanpartners involved in a financialinformation exchange agree ontransaction number and dollarvalues passed, processed, andrejected? (M)

11. Does the automated systembalancing include cumulativesubsidiary account balancing tothe general ledger? (M)

12. Does the automated systembalancing ensure that guarantyloan partners reflect the samepicture of valid transactions

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System overview

Yes/no

na Explanation

over a specified period of time,normally a month? (M)

13. Is the system capable ofsupporting managerial costaccounting and credit subsidyreestimates? (M)

14. If the agency acquires propertyserving as collateral on adefaulted guaranteed loan, doesthe system provide the propertymanagement system with theinformation needed to manageand liquidate the collateral?(M)

Relationship with other

systems –

system interface functioning

verification

15. Does a team, independent of thedevelopment organization,perform all verifications toensure that the system iscapable of interfacing withother financial managementsystems? (M)

16. Does verification includeintersystem testing to ensurethat the system can processincoming and outgoing data forother interfaces for theguaranty loan program? Thistesting will ensure that theguaranty loan system canaccept data files, process themcorrectly, and transmit thenecessary transactions to othersystems. (M)

17. Does verification include havingall intersystem vendors involvedwith the testing create and

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System overview

Yes/no

na Explanation

accept a comprehensive testplan? (M)

18. Does verification include havinga team, independent of thedevelopment organization,review requirements, test plans,and scenarios; monitor testexecution; and ensure thattesting objectives are met? (M)

19. Does verification include theteam, independent of thedevelopment organization,working as a partner in thedevelopment effort, gainingsystem-specific knowledgewhile reviewing processes,outputs, and techniques toensure compliance withprocedures and quality results?(M)

20. Are issues, when they arise,tracked through a configurationmanagement (CM) tool? (M)

21. Are resolutions included intesting sign-off documentationwhen issues are resolved? (M)

22. Does the review, other than testexecution, include, at aminimum, the following:requirements traceabilitymatrix, functional requirementsdocument, detail designdocument, systemspecifications, and manualprocedures? (M)


systems –


verification –

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System overview

Yes/no

na Explanation

requirements traceability

matrix

23. Is the system able todemonstrate that alldevelopment requirements areincorporated into the finalsystem output through the useof requirements traceabilitymatrices? (M)

24. Are the matrices submitted withthe preliminary designdocument? (M)

25. Are the matrices updated witheach subsequent step in theenhancement effort (i.e.,requirements should be tracedthrough preliminary design,detailed design, specifications,test plans, and test results)?(M)


systems –


verification –

functional requirements

document

26. Does the system perform workneeded to accomplish thespecified outcomes, achieve orexceed the specifiedperformance standards, recordand reconcile money, and trackreport activity? (M)


systems –


verification –

detail design document

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System overview

Yes/no

na Explanation

27. Does the detail design fullyconsider requirements forhardware, software, integrationwith other systems, security,telecommunications, datamanagement, manualprocedures, qualityassurance/quality control(QA/QC), auditability, andcapacity planning andmanagement? (M)

28. Does the detail designdocument the design insystem/subsystemspecifications, programspecifications, and databasespecifications? (M)


systems –


verification –

system specifications

29. Are system/subsystemspecifications, programspecifications, and databasespecifications all includedwithin the detail designdocument? (M)

30. Do the specifications include, ata minimum, flowcharts,input/output processing, andfile layouts? (M)


systems –


verification –

manual procedures

31. Are all system modifications ormaintenance changesincorporated into manual

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System overview

Yes/no

na Explanation

procedures and functions asnecessary to keep theprocedures up-to-date? (M)

32. Does system testing ensure thatall related manual proceduresperform according to systemrequirements? (M)


systems –

post-implementation testing

33. Are transactions reviewed tomake sure that they areprocessing correctly and thatthe data being produced arereliable after the system isimplemented? (M)

34. Is the testing conducted withactual production data? (M)

35. Is the testing done with theteam, independent of thedevelopment organization,verifying expected results? (M)

36. Are daily, monthly, quarterly,and fiscal/calendar year-endreports reviewed prior todissemination, wheneverpossible, to ensure that the datahave been updated correctly?(M)


systems –

configuration management

37. Is configuration management(CM) used to establish andmaintain the security andintegrity of the systemthroughout its development lifecycle? (M)

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System overview

Yes/no

na Explanation

38. Does the comprehensive CMprovide all project teammembers with a consistent levelof understanding of the systemengineering process, maintainsystems stability, and reducetechnical risk associated withthe development effort? (M)

Data requirements

39. Does the system store, access,and/or update these seven typesof data:

Lender/servicerinformation?

Guarantee information? Claim information? Acquired loan information? Program criteria? Core financial system

information? External organizational

information?

In the JFMIP document, agrouping of related types ofdata is referred to as aninformation store. The terminformation store (rather thandatabase or file) is used toavoid any reference to thetechnical or physicalcharacteristics of the datastorage medium. (M)

40. Has the agency determined theactual data storage (physicaldatabases and files) duringsystem development andimplementation based on theloan program’s statutoryrequirements and the agency’stechnical environment,processing volumes,

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System overview

Yes/no

na Explanation

organizational structure, anddegree of system centralizationor decentralization? (M)

Data requirements –

information stores internal to

the guaranteed loan system –

lender/servicer information

41. Does the information storeinclude the following data:

Lender/servicer applicationdata?

Lender/servicer reviewdata?

Approved lender/servicerdata?

Lender/servicer status?(M)




guarantee information


Guarantee data (e.g., lender,loan amount, guaranteelevel, loan status, subsidyinformation, interest rate,and loan terms)?

Collateral data (e.g.,appraised value, status;mandatory unlessspecifically excluded byprogram requirements)?

Borrower data (e.g.,borrower’s name, address,social security number(SSN) or taxpayeridentification number (TIN),financial data)?

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System overview

Yes/no

na Explanation

Guarantee fees due and/orcollected? (M)

43. Does the information storeinclude rejected guarantee data(e.g., lender, reason forrejection)? (V)




claim information


Claim application data? Claim status? (M)




acquired loan information


Acquired loan data? Acquired loan status? Acquired loan collateral

data? Payment history? (M)




program criteria


Lender eligibility? Lender financial rating? Lender risk rating? Portfolio evaluation?

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System overview

Yes/no

na Explanation

Creditworthiness?(Mandatory unlessspecifically excluded byprogram requirements.)

Borrower eligibility? Guarantee fees? Fee penalty? Claim application

evaluation? Invoicing? Receipt application rules? Debt collection? CAIVRS (credit alert

interactive voice responsesystem) referral?

Credit bureau reporting? Treasury offset referral? Collection agency selection? Litigation referral? Write-off? (M)


Close-out? Loan sale? (V)


information stores external to


core financial system

information


Budget execution data? Receivables? Disbursement data? Collections/receipts? Administrative costs? Principal and interest data? Acquired asset data? Collateral? (M)

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System overview

Yes/no

na Explanation


information stores external to


external organizational

information


Lender rating data? Treasury interest rates? SF-1151s (Non-Expenditure

Transfer Authorization) andSF-1081s (Voucher andSchedule of Withdrawalsand Credits)?

Loan status? Sale approval? Collection activities and

results? Write-off approval? Foreclosure data? (M)

50. Does the information storeinclude sale proceeds? (V)

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Introduction to functional

requirements

Yes/no

na Explanation

1. Are the following functionssupported by the system?

Lender management? Guarantee extension and

maintenance? Portfolio management? Acquired loan servicing? Delinquent debt collection? Treasury cross-servicing? Other reporting

requirements? (M)

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Lender management

Yes/no

na Explanation

General requirements –

lender eligibility process –

process lender application

1. Does the automated systemrecord and update lenderapplication information,ensuring that all required dataare present and valid (e.g., nine-digit numeric taxpayeridentification number (TIN))?(M)

2. Does the automated systemdocument that any requiredlender application fee has beenreceived and calculatedcorrectly? (M)

3. Does the automated systemprovide an automated interfacewith the core financial systemto record the receipt of anyapplication fee? (M)



evaluate lender eligibility

4. Does the automated systemcompare lender applicationinformation against informationon firms currentlydebarred/suspended fromparticipating in a governmentcontract or delinquent on a debtto the government? (M)

5. Does the automated systemcompare lender applicationinformation against informationconcerning the lender’sfinancial credentials frombanking regulatory agencies,

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Lender management

Yes/no

na Explanation

rating services, and otherinformation sources? (M)

6. Does the automated systemcompare lender applicationinformation against lenderperformance data? (M)

7. Does the automated systemcompare lender applicationinformation against qualificationrequirements for principalofficers and staff? (V)



approve/disapprove lender

application

8. Has the agency consummatedan agreement in accordancewith the requirements defined inOMB Circular A-129, Policies forFederal Credit Programs andNon-Tax Receivables (January1993), for approved lenders?(M)

9. Does the automated systemupdate the lender informationstore to reflect the agency’sdecision on the lenderapplication? (M)

10. Does the automated systemmaintain data on lenderdisapprovals as an historicalreference to support effectivemonitoring of future lenders?(M)

11. Does the automated systemgenerate and electronicallytransmit a notice to inform thelender of approval or

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Lender management

Yes/no

na Explanation

disapproval of the lender’sapplication? (V)

12. Does the automated systemrecord text comments related toapproval or disapproval of thelender application? (V)



establish lender agreement

13. Does the agreement (agency’scontractual relationship withthe approved lender) stateprogram requirements, lenderand agency responsibilities, duediligence standards, reportingstandards, and loan servicerparticipation requirements?(M)

14. Does the automated systemrecord relevant data concerningthe lender agreement? (M)

15. Does the automated systemdocument that the lenderagreement has beenconsummated by the agencyand lender? (M)

16. Does the automated systemprovide a tracking mechanismto identify expiring agreementsneeding renewal? (M)

17. Does the automated systemgenerate the lender agreementfor signature by the lender? (V)

18. Are annual or special reviewsconducted for high-volumelenders/servicers orlenders/servicers with poorperformance? (M)

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Lender management

Yes/no

na Explanation

General requirements --

lender/servicer monitoring

process –

monitor lender/servicer

performance

19. Do agreements between lendersand servicers specify that loanservicers must meet applicableparticipation requirements andperformance standards? (M)

20. Does the agreement also specifythat servicers acquiring loansmust provide any informationnecessary for the lender tocomply with reportingrequirements to the agency?(M)

21. Does the automated systemcompare lender/servicerfinancial and performanceinformation against agencyportfolio evaluation criteria toidentify lenders/servicers forregular or special review? (M)

22. Does the automated systemcompute performance statisticsfor effective monitoring,including delinquency rates,default rates, and claim rates?(M)

23. Does the automated systemcompute a quantified risk foreach lender/servicer? The riskis quantified by weightingappropriate risk factors (e.g.,loan volume, delinquency rate,default rate) based on thecorrelation between the riskfactors and lender/servicerperformance. (M)

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Lender management

Yes/no

na Explanation

24. Does the automated systemcompare the quantifiedlender/servicer risk to riskrating criteria to assign a riskrating to each lender/servicer(e.g., high, medium, low)? (M)

25. Does the automated systementer high-risk lenders/servicerson a problem watchlist andgenerate a notice to eachaffected lender/servicer? (V)



process –

support lender/servicer reviews

26. Does the agency document theon-site review findings oflenders/servicers to evaluatetheir performance againstprogram standards andrequirements and submit themto agency review boards? (M)

27. Does the automated systemprovide historical performanceinformation on lenders andservicers identified for review tothe review team? (M)

28. Does the automated systemprovide for scheduling andtracking of the review team’sactivities? (V)

29. Does the automated systemdocument review resultsincluding date of review,name(s) of reviewer(s), and anydeficiencies and associatedexplanations? (V)

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Lender management

Yes/no

na Explanation

30. Does the automated systemrecord text comments relevantto the review process? (V)



process –

assess corrective action

31. For minor noncompliances, dothe agencies and lender/serviceragree on corrective actions?(M)

32. Has the agency defined thedecertification process andestablished timetables by whichdecertified lenders may applyfor reinstatement in accordancewith OMB Circular A-129? (M)

33. Does the automated systemupdate the status of lenders andservicers that do not complywith agency standards forcontinued program participationor do not correct deficienciesidentified through reviews in areasonable period of time? (M)

34. Does the automated systemprovide data to supportcorrective action plans such aspenalties and/or sanctions?(M)

35. Does the automated systemrecord penalties and/orsanctions imposed by theagency review board on thoselenders or servicers found to bein serious and frequentnoncompliance with federalprogram standards? (M)

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Lender management

Yes/no

na Explanation

36. Does the automated systemgenerate a notice to inform thelender/servicer of a finding ofnoncompliance (electronically,where appropriate), includingany penalties or sanctions andthe right to appeal? (V)

37. Does the automated systemdocument and track correctiveaction plans agreed to by theagency and the lender/servicer,including proposed resolutiondates, and updatelender/servicer data to reflectany changes in status resultingfrom the corrective actions?(V)

38. Does the automated systemdocument and track appealsreceived from thelender/servicer and agencyappeal decisions and generate adecision notice to thelender/servicer? (V)

Collateral requirements

(Note: There are no collateralrequirements applicable to thelender management function.)

Internal management

information requirements

39. Are the internal managementinformation requirements(lender eligibility activity,completed reviews, lenderperformance, exceptions)available to agency creditprogram managers anddesignated internal reviewofficials on a periodic or on anas requested basis? (M)

______________________________________________________________________________


______________________________________________________________________________


Lender management

Yes/no

na Explanation

40. Has the agency determined thespecific managementinformation needs necessary tomanage its credit programsbased on the agency’s missionand its applicable statutoryrequirements? (M)

41. Does the system, in order tosupport the above needs,provide a user-friendly querytool (preferably graphics-based)that facilitates reporting rapidlyon any required data elements?(M)

42. Does the agency maintainfinancial accountinginformation at appropriatelevels of summary (transaction,loan history, risk category,cohort, account) forcomputational and reportingpurposes? (M)

43. Has the agency determinedwhether the information shouldbe provided on hard copyreports or through systemqueries? (M)

Internal management

information requirements –

lender eligibility activity

44. Does the lender eligibilitysummary provide informationabout the number of lenderapplications received, approved,and disapproved in a period?The purpose of this datasummary is to monitor thelender application activity of theagency and the disposition ofthe lender applications. (M)

______________________________________________________________________________


______________________________________________________________________________


Lender management

Yes/no

na Explanation

Internal management


completed reviews

45. Does the summary convey theresults of the lender reviewscompleted during the reportingperiod? (M)

46. Does the summary describe anyrecommended actions resultingfrom the lender reviews? (M)

Internal management


lender performance

47. Does the summary present theoverall performance of eachlender’s portfolio, includingtotal losses across fiscal years?The purpose of this datasummary is to identify lenderswith consistently high defaultrates or other poor performancefor agency review andevaluation. (M)

Internal management


exceptions

48. Does the summary highlightdeficiencies in the lendermanagement function? Anexample of exception data is alist of lenders who are not incompliance with agency andstatutory requirements and whohave not been penalized ordecertified. (M)

49. Is the data summary generatedperiodically or on demand asneeded? (M)

______________________________________________________________________________


______________________________________________________________________________


Guarantee extension and

maintenance

Yes/no

na Explanation

General requirements

1. Does the agency provideguidance to its lenders fordetermining a borrower’screditworthiness? (M)

2. Does the agency train itspersonnel to evaluate thelender’s analysis ofcreditworthiness? (M)


guaranteed request evaluation

process –

process request for loan

guarantee

3. Does the automated systemrecord critical data on thelender’s guarantee request tosupport the guaranteeevaluation process? (M)

4. Does the automated systemprovide access to guaranteerequest information to eachindividual participating in theguarantee decision? (M)

5. Does the automated systemrecord text comments relevantto the guarantee decision? (V)



process –

verify borrower program

eligibility and creditworthiness

6. Does the automated system,where applicable, compareborrower information on thelender’s guarantee request to

______________________________________________________________________________


______________________________________________________________________________



maintenance

Yes/no

na Explanation

agency program borrowereligibility criteria? (M)

7. Does the automated system,where applicable, check theappropriate system data files todetermine whether a lender hasrecently submitted a duplicateguarantee request for theapplicant or a guarantee requestfor the applicant has beenpreviously denied? (M)

8. Does the automated system,where applicable, documentwhether the applicant haspreviously defaulted on debt tothe federal government? (M)

9. Does the automated system,where applicable, compare theapplicant’s creditworthinessinformation to system-storedprogram creditworthinesscriteria and assign a credit riskrating to the applicant, unlessspecifically excluded byprogram requirements? (M)

10. Does the automated system,where applicable, documentthat the lender obtained a creditbureau report? (V)

11. Does the automated system,where applicable, documentthat the borrower’s financialdata, repayment ability, andrepayment history have beenverified? (V)



process –

conduct funds control

______________________________________________________________________________


______________________________________________________________________________



maintenance

Yes/no

na Explanation

12. Does the automated systemprovide the information neededto compute the credit subsidyamount associated with a loanguarantee using projected cashflows and the applicableTreasury interest rate inaccordance with OMB CircularA-34, Instructions on BudgetExecution; OMB Circular A-11,Preparation and Submission ofBudget Estimates (updatedannually); and Statement ofFederal Financial AccountingStandards (SFFAS) No. 2,Accounting for Direct Loans andLoan Guarantee. (M)

13. Does the automated systemprovide an automated interfacewith the core financial systemto determine if (1) sufficientfunds are available in theprogram account and, ifavailable, (2) lending limits inthe financing account aresufficient to cover the subsidycost and the face value of theproposed guarantee? (M)



process –

approve/reject guarantee

request

14. Does the automated systemreflect the approved guaranteestatus? (M)

15. Does the automated systemaccept, identify, track, andreport supervisor overrides ofsystem-generatedacceptance/rejectionrecommendations? (M)

______________________________________________________________________________


______________________________________________________________________________



maintenance

Yes/no

na Explanation

16. Does the automated systemcreate and maintain a systemrecord of rejected guaranteerequests? (M)

17. Does the automated systemnotify the lender of approval ordisapproval (electronicallywhere appropriate)? (V)


guaranteed origination

process –

issue loan guarantee

18. Does the automated systemrecord the cohort and riskcategory, as defined in OMBCircular A-34, Instructions onBudget Execution, associatedwith the guaranteed loan? (M)

19. Does the automated systemassign a unique account numberto the guaranteed loan thatremains unchanged throughoutthe life of the guarantee? (M)

20. Does the automated systemgenerate a guaranteeendorsement to confirm that theloan is guaranteed and transmitit to the lender (electronicallywhere possible)? (M)

21. Does the automated systemcalculate and record theguarantee origination fee inaccordance with the terms andconditions of the guaranteeagreement? (M)

22. Does the automated systemrecord collections of originationfees received? (M)

______________________________________________________________________________


______________________________________________________________________________



maintenance

Yes/no

na Explanation

23. Does the automated systemprovide an automated interfacewith the core financial systemto record the guaranteed loancommitment, the obligation forthe related subsidy, and theorigination fee, receivable, andcollection? (M)

24. Does the automated systemtransmit the origination feeinvoice to the lender? (V)


guaranteed origination

process –

document lender loan

disbursement

25. Does the automated systemprovide an automated interfacewith the core financial systemto record the outlay of subsidyfrom the program account?(M)

26. Does the automated systemrecord information on loandisbursements by the lender,including amounts andapplicable Treasury interestrates, to support interestcomputations and subsidyreestimates, unless specificallyexcluded by programrequirements? (M)

27. Does the automated systemprovide the capability to receiveelectronic transmission ofdisbursement data by thelender? (V)

28. Does the automated systemprovide the capability for

______________________________________________________________________________


______________________________________________________________________________



maintenance

Yes/no

na Explanation

reporting loan closinginformation? (V)


guaranteed loan maintenance

process –

document loan modifications

29. Does the automated systemsupport reevaluation of themodified loans in accordancewith OMB Circular A-34 andprogram policy? (M)

30. Does the automated systemreflect the modified status ofthe guaranteed loan? (M)

31. Does the automated systemestablish a new loan accountand collateral record for eachnew debt instrument? (M)

32. Does the automated systemassign a unique loan accountnumber to the new accountrecord? (M)

33. Does the automated systemmaintain a link between the newloan account established for thenew debt instrument and the oldloan account records? (M)

34. Does the automated systemperform a funds control checkto verify the availability ofsubsidy through an automatedinterface with the core financialsystem? (M)

35. Does the automated systemprovide an automated interfacewith the core financial systemto record the subsidy changes

______________________________________________________________________________


______________________________________________________________________________



maintenance

Yes/no

na Explanation

associated with the guaranteedloan modification? (M)



process –

process fees

36. Does the automated systemcompare guaranteed loan datato guaranteed fee criteria todetermine which lenders oweguarantee fees? (M)

37. Does the automated systemcompute the amount of theguarantee fee? (M)

38. Does the automated systemidentify those lenders withoverdue fee payments andcalculate penalties on loans forlenders who have not submittedguarantee fee payments? (M)

39. Does the automated systemgenerate invoices, includingpenalties assessed for latepayment, for guarantee feepayments due from lenders(electronically where possible)?(M)

40. Does the automated systemprovide an automated interfacewith the core financial systemto record the receipt ofguarantee fees from lenders?(M)



process –

record interest supplement

payments

______________________________________________________________________________


______________________________________________________________________________



maintenance

Yes/no

na Explanation

41. Does the automated systemidentify guaranteed loansrequiring interest supplementpayments? (M)

42. Does the automated systemcompare current interest ratesto the interest rates in theagreement to determine theappropriate levels of interestsupplements required? (M)

43. Does the automated systemrecognize the interestsupplement payment as aninterest subsidy expense and aloan guarantee interestsupplement liability? (M)

44. Does the automated systemprovide an automated interfacewith the core financial systemto initiate and recorddisbursements for interestsupplement payments? (M)

45. If the guaranteed loan systemhandles the paymentprocessing, does it meet therequirements in the CoreFinancial System Requirementsrelated to payments and sendsummary data to the corefinancial system? (M)


46. Does the automated systemcapture the estimated usefuleconomic life of the pledgedcollateral and compare it to theproposed term of the loan? (V)

47. Does the automated systemdocument that transactions overa predetermined amount

______________________________________________________________________________


______________________________________________________________________________



maintenance

Yes/no

na Explanation

identified by programrequirements have a collateralappraisal by a licensed orcertified appraiser? (V)

48. Does the automated systemcompute the loan-to-value ratioand flag those loans with a ratioexceeding applicable programrequirements? (V)

Internal management


49. Are the internal managementinformation requirements(approval and rejectionmonitoring, overrideexpectations, potentialapplication fraud,approval/rejection statistics,detailed transaction history,median loan-to-value ratio, loanguarantee fee collection, loanguarantee periodic feecollection, and exceptions)available to agency creditprogram managers anddesignated internal reviewofficials on a periodic or on anas requested basis? (M)

50. Has the agency determined thespecific managementinformation needs necessary tomanage its credit programsbased on the agency’s missionand its applicable statutoryrequirements? (M)

51. Does the system, in order tosupport the above needs,provide a user-friendly querytool (preferably graphics-based)

______________________________________________________________________________


______________________________________________________________________________



maintenance

Yes/no

na Explanation

that facilitates reporting rapidlyon any required data elements?(M)

52. Does the agency maintainfinancial accountinginformation at appropriatelevels of summary (transaction,loan history, risk category,cohort, account) forcomputational and reportingpurposes? (M)


Internal management


approval and rejection

monitoring

54. Does the approval and rejectionmonitoring summary provideinformation about all creditapplications that were approvedor rejected for a given timeperiod? (M)

55. Are the data broken down intoseparate statistics on creditapprovals and rejections? (M)

56. Does the approval sectionindicate the number ofapproved applications and thepercentage of total applicationsthat they represent? (M)

57. Are the total requested amountand the total approved amountshown for each loan originationoffice? (M)

______________________________________________________________________________


______________________________________________________________________________



maintenance

Yes/no

na Explanation

58. Does the rejected applicationsection contain the number ofrejected applicants and thepercentage of total applicationsthey represent? (M)

59. Is the total of all loans requestedalso shown? (M)

60. Does the summary also list theaverage time spent to process acredit application, from the timeof application until the finaldecision is made? (M)

Internal management


override expectations

61. Does the override expectationssummary identify all creditapplication decisions thatoverride the actionrecommended by the automatedsystem processes? Overridescan occur in two situations: anapplication is approved eventhough the borrower’s programeligibility or creditworthinessassessment is not acceptableunder agency programmanagement criteria, or anapplication is rejected eventhough the applicant’s programeligibility and creditworthinessare acceptable under agencyprogram management criteria.(M)

Internal management


potential application fraud

62. Does the potential applicationfraud summary provide allapplications that matched one

______________________________________________________________________________


______________________________________________________________________________



maintenance

Yes/no

na Explanation

or more pending or recentlyrejected applications?Comparison is based on fourcriteria: applicant name,applicant address, applicantphone number, and applicanttaxpayer identification number(TIN). If a pending applicationmatches any of these criteria,the data fields that matched andthe original application andpending applicationidentification numbers willappear on this data summarywith primary applicationidentification information. (M)

Internal management


approval/rejection statistics

63. Does the approval/rejectionstatistics summary containstatistics on guaranteeapprovals and rejections? (M)

64. Is the data summary brokendown into separate statistics onguarantee approvals andrejections? (M)

65. Does the approval sectionindicate the number ofapproved applications and thepercentage of total applicationsthat they represent? (M)

66. Are the total requested amountand total approved amountshown for each guaranteeorigination office? (M)

67. Does the rejected applicationsection contain the number ofrejected applicants and the

______________________________________________________________________________


______________________________________________________________________________



maintenance

Yes/no

na Explanation

percentage of total applicationsthat they represent? (M)

68. Is the total of all guaranteesrequested also shown? (M)

Internal management


detailed transaction history

69. Does the detailed transactionhistory summary containdetailed loan guarantee andaccount data? The datasummary is used for control andtracking and also as an audittrail. (M)

70. Is the information presented byprogram for both the currentand prior reporting period?(M)

Internal management


median loan-to-value ratio

71. Is the median loan-to-value ratiosummary used to track themedian loan-to-value ratios forguarantees written by eachregional office? The medianloan-to-value ratio is the mid-point in the range of portfolioloan-to-value ratios. (M)

Internal management


loan guarantee fee collection

72. Is the loan guarantee feecollection summary used tomonitor guarantee originationfee collections? (M)

______________________________________________________________________________


______________________________________________________________________________



maintenance

Yes/no

na Explanation

Internal management


loan guarantee periodic fee

collection

73. Is the loan guarantee periodicfee collection summary used tomonitor the periodic loanguarantee fee collectionactivity? (M)

Internal management


exceptions

74. Does the exceptions summaryhighlight deficiencies inguarantee originationprocessing? (M)

75. Is the exceptions summary (e.g.,a list of approved requests thathave not been processed in aspecified period of time)generated periodically or ondemand as needed? (M)

______________________________________________________________________________


______________________________________________________________________________


Portfolio management

Yes/no

na Explanation


portfolio performance process –

process guaranteed loan status

reports from lender

1. Does the automated systemreceive and document loanguarantee information fromlenders (electronically whereappropriate)? (M)

2. Does the automated systemmaintain standard informationon the history and status of eachguaranteed loan (e.g., borroweridentification, amount andnature of debt, loan originator,holder, and/or servicer)? (M)

3. Does the automated systemmaintain data from the lenderthat identifies delinquentaccounts and potential defaults?(M)

4. Does the automated systemprovide agency access to theloan status information? (M)

5. Does the automated systemreceive and record lendersubstitution and/or transferdata, i.e., secondary marketsales (electronically wherepossible)? (M)

6. Does the automated systemaccept lender data by cohortand risk category? (M)


portfolio performance process –

compute portfolio performance

measures

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

7. Does the system’s performancemeasurement highlight programtrends to prompt reexaminationof agency policies as conditionswarrant? (M)

8. Is the value of a givenperformance measure examinedwithin the context of the totalcost to the agency using themeasure? (M)

9. Does the automated systemcompute and maintain programperformance information (e.g.,number and dollar value ofloans made, average loan size,loans made by geographicalregion, number and amount ofdefaulted loans, number andamount of claims paid, amountof loan write-offs)? (M)

10. Does the automated systemcompute and maintain financialmeasures to help assess thecredit soundness of a loanprogram (e.g., overall portfoliorisk rate, average loan-to-valueratio (for collateralizedprograms), write-offs as apercentage of seriouslydelinquent acquired loans, netproceeds on real property soldcompared to appraised value,loan loss rates, recovery rates,loan currency rates)? (M)

11. Does the automated systemmaintain portfolio data neededto help determine theeffectiveness of use of agencyresources (e.g., administrativecost per loan guaranteeapproved, administrative costper acquired loan serviced,

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

administrative cost per dollarcollected, time required toprocess a loan guaranteeapplication)? (M)

12. Does the agency reestimatesubsidy costs upwards ordownwards to reflectdifferences in interest rates,technical assumptions, andexpected changes in current andfuture conditions that haveoccurred between the time ofbudget formulation and loandisbursement? (M)

13. Does the agency use the fundsmanagement function of thecore financial system to recordthe appropriations,apportionments, and limitationsassociated with the programaccount and financing accountfor each credit program? (M)

14. Does the system access the corefinancial system to performfunds control validation?Accounting for and controllingadministrative expenses relatedto credit programs can beaccomplished in the corefinancial system, so this activitywould not normally be includedin the guaranteed loan system.(M)


program financing process –

support Treasury borrowing

calculations

15. Are subsidy amounts estimatedso as to cover the costs of anypayments of guarantee claimsfor defaulted loans? (M)

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

16. Does the automated systemexecute SF-1151s and recordamounts borrowed fromTreasury to cover temporaryshortfalls in the subsidyestimates? (M)

17. Does the automated systemtrack the amount of uninvestedfunds in the financing accountas needed to support interestearnings calculations? (M)

18. Does the automated systemcompute interest expense onborrowings and interestearnings on univested funds?(M)

19. Does the automated systemexecute and record repaymentof principal using SF-1151s andinterest to Treasury using SF-1081s? (M)

20. Does the automated systemexecute and record receipt ofinterest earnings from Treasuryon univested funds usingSF-1081s? (M)


program financing process –

support subsidy reestimates

21. Does the reestimate of eachcohort cash flow include claimspaid and fees collected,defaults, delinquencies,recoveries, etc.? (M)

22. Does the reestimate of eachcohort cash flow includeprepayments and collections ofprincipal, interest, and fees

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

when the agency acquires theguaranteed loan? (M)

23. Does the automated systemsupport the reestimate of thesubsidy cost for each cohortand risk category of loans at thebeginning of each fiscal year inaccordance with OMB CircularA-34 and SFFAS No. 2? (M)

24. Does the automated systemmaintain cash flow data thatpermits comparison of actualcash flows each year (and newestimates of future cash flows),as well as historical data fromprior years to the cash flowsused in computing the latestloan subsidy estimate? (M)

25. Does the automated systemcompare the current yearreestimated subsidy cost toprior years reestimated loansubsidy costs to determinewhether subsidy costs for a riskcategory increased ordecreased? (M)

26. Does the automated systemtransfer loan subsidy from thoserisk categories with an excessof loan subsidy to those riskcategories in the same cohortthat are deficient in loansubsidy to provide adequatefunding for each risk category?(M)

27. Does the automated systemgroup those cohorts that needindefinite appropriation loansubsidy funds separately fromthose cohorts that have excessfunds? (M)

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

28. Does the automated systemsupport the request for anapportionment and obligatefunds to cover the subsidyincrease for those cohorts ofloans that have insufficientsubsidy? (M)

29. Does the automated systemtransfer excess subsidy ofcohorts of loans to the special-fund receipt account? (M)

30. Does the system support thereestimate calculation andprovide the necessary data torecord the reestimate in thecore financial system? (M)


support subsidy estimate –

loan characteristics

31. Does the loan system maintaindata that are predictive of loanperformance and subsidy costs?Loan characteristics maintainedin a loan system will varygreatly from program toprogram. (M)

32. Is the information obtainedfrom either the loan system, thecore financial system, or otherdata repository within oroutside the agency? (M)

33. Does the agency collect at leastthe following loancharacteristics:

Loan number? Cash flowsshould be maintained at theindividual loan level, eventhough analysis might oftenbe done at the cohort level.

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

Cash flows, such as receiptsfrom property disposition,must be tracked back to theoriginal loan via the loannumber or other dataelement used to identify theoriginal loan.

Date of obligation? Thisinformation is necessary forreviewing historical cohortdata, since cohorts aredefined by year ofobligation, and for relatingloan behavior to other datedvariables.

Loan terms and conditions?A system should maintainthe actual loan terms,including maturity, interestrate, and up-front and/orannual fees. These data arecritical for comparing actualpayments to scheduledpayments and for measuringthe relationship betweendefault risk and loan termsand conditions. The systemshould be able to calculateand report, as necessary, theaggregate repaymentschedule for a cohort.

Changes in loan terms andconditions? Any change interms and conditions needsto be recorded in addition tothe original terms andconditions, not in place ofthem. These data areneeded both to reestimatethe subsidy cost and toestablish a basis forestimating new subsidies.

Borrower location?Agencies may choose tocollect several locationelements, such as zip code,

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

congressional district code,approving office code, andservicing office code forregional analysis.

Borrower creditworthiness?Since creditworthiness maybe a strong predictor ofdefaults, the loan systemshould include measures ofthe financial condition ofthe business or individualreceiving the loan and pastcredit experience, unlessspecifically excluded byprogram requirements.

Loan use? Tracking theintended loan use mayreveal a significant variancein cost depending on the useof loan proceeds.

Program-specific data?Other loan characteristicsmay also be important inpredicting default. The loan-to-value ratio is a criticaldata element for predictinghousing loan defaults; forstudent loans, the type ofeducational institution maybe important; the value ofcollateral is required unlessspecifically excluded byprogram requirements. (M)



economic data

34. Does the system maintain theprimary economic factors thatinfluence loan performance?The critical indictors will varyacross programs. For housingloans, among other factors,property values and houseappreciation rates should be

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

monitored. For programs thatdetermine a borrower’s interestrates based on the borrower’sincome, all economic data onincomes should be maintainedin either the guaranteed loansystem, the core financialsystem, or another datarepository within or outside theagency. (M)



historical cash flows

35. Are all cash transactions relatedto each loan maintained in thesystem to allow for trendanalysis? (M)

36. Has the agency consideredgrouping transactions by thetype of cash flows that areprojected in loan programsubsidy estimates sincetransactions may be identifiedby a wide variety oftransactional codes? Thesegroupings will vary fromprogram to program, dependingon the way cash flows areprojected for subsidy estimates.Examples of informationgroupings, which may bemodified to fit actual loanprograms, include:

Guaranteed amount. Disbursement amount and

disbursement rate for eachyear.

Up-front fee. Annual fees. Interest subsidies. Claims paid and guarantees

terminated.

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

Defaulted loan dataincluding both the timingand amount.

Delinquencies. Recoveries (including both

the timing and amount) ondefaulted loans by recoverymethod such as sale ofcollateral or offsetprograms.

Loan-to-value ratios. Scheduled principal and

interest payments (if theagency acquires andservices the loan).

Actual principal and interestpayments (if the agencyacquires and services theloan).

Prepayment includingtiming and amount.

Repayment activity. (M)

37. Does the agency obtain theabove information from eitherthe guaranteed loan system, thecore financial system, or otherdata repository (such asmicrofiche or CD-ROM thatpermits easy retrieval of data)within or outside the agency?(M)


(Note: There are no collateralrequirements applicable to theportfolio management function.)

Internal Management

Information Requirements

38. Are the internal managementinformation requirements (e.g.,detailed transaction history,profile of guaranteed loan

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

portfolio, and program creditreform status) available toagency credit programmanagers and designatedinternal review officials on aperiodic or on an as requestedbasis? (M)

39. Has the agency determined thespecific managementinformation needs necessary tomanage its credit programsbased on the agency’s missionand applicable statutoryrequirements? (M)

40. Does the agency maintainfinancial accountinginformation at appropriatelevels of summary forcomputational and reportingpurposes (transaction, loanhistory, risk category, cohort,and account)? (M)


42. Does the system provide at leastthe following types ofmanagement information:

Detailed transactionhistory?

Profile of guaranteed loanportfolio?

Program credit reformstatus? (M)

Internal management



______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

43. Does the detailed transactionhistory summary identify, foreach cohort, the number andamount of loan guarantees ineach phase of the guaranteedloan life cycle? (M)

44. Does the information providedinclude the number of loanscurrent and delinquent, thenumber of loans for which aclaim has been submitted, andthe total number and value ofloans in the portfolio? (M)

Internal management


profile of guaranteed loan

portfolio

45. Does the profile of guaranteedloan portfolio summary providea year-to-date profile of eachguaranteed loan program, withcomparisons to the prior year’sloan guarantee activity? (M)

Internal management


program credit reform status

46. Does the program credit reformstatus summary provide thestatus of the fiscal year’s creditreform appropriations andsubsidy levels? (M)

______________________________________________________________________________


______________________________________________________________________________


Acquired loan servicing

Yes/no

na Explanation

General requirements

1. Has the agency ensured that thelender has taken all appropriatesteps to collect a debt includingforeclosure and liquidation ofany collateral? (M)


claim processing process –

evaluate claim application

2. If the lender has foreclosed andliquidated any collateral and stillhas a balance due, does theagency pay the claim andattempt to collect the deficientamount based on statutoryrequirements and agencypolicy? (M)

3. Does the automated systemrecord key claim data, maintaindata on original and, ifapplicable, final claims? (M)

4. Does the automated systemcompare the claim applicationinformation to the agencyprogram claim applicationevaluation criteria? (M)

5. Does the automated systemsuspend processing for claimsthat are incomplete untilcorrected? (M)

6. Does the automated systemidentify claims not meetingagency program requirementsand notify the lender of therejection? (M)

7. Does the automated systemdocument and track information

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

on accepted and rejected claimsand the reason for therejections? (M)

8. Does the automated systemreflect the status of the claim?(M)

9. Does the automated systemhave edits to address claimsissues? (M)

10. Does the automated systemrecord or track claims errors?(M)


claim processing process –

process authorized claim for

payment

11. Does this activity supportunderlying details for thepayment of an approvedguaranteed loan claim to thelender? (M)

12. Does the automated systemcalculate the claim payment tobe made, making adjustmentsfor any disallowed amounts orauthorized debt collectionactivities? (M)

13. Does the automated systemprovide an automated interfacewith the core financial systemto initiate a disbursement of theclaim payment to the lender?(M)

14. If the system processespayments, does it meet therequirements in the CoreFinancial System Requirements

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

related to payment data in thecore financial system? (M)

15. Does the automated systemrecord acquired loaninformation and establishappropriate accounting entries,such as a receivable? (M)

16. Does the agency ensure thatinvoices are generated promptlyand that efficient mechanismsare in place to collect andrecord payments and to providesupport for loan servicing? (M)

17. Are borrowers encouraged touse preauthorized debit orcredit cards when making loanpayments? (M)


account status maintenance

process –

evaluate delinquent debtors for

collection or write-off

18. Does the automated systemidentify accounts for whichcollection is to be pursued?(M)

19. Does the automated systemidentify accounts that should bewritten-off? (M)



process –

invoice debtor

20. Does the automated systemcalculate outstanding balancesfor each loan account invoiced,including principal, interest, late

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

charges, and other amountsdue? (M)

21. Does the automated systemidentify loan accounts to beinvoiced based on agencyprogram invoicing criteria andloan account information? (M)

22. Does the automated systemgenerate and transmit aninvoice to each borrower? (M)

23. Does the invoice include, at aminimum, borrower ID, amountdue, date due, the date afterwhich the payment will beconsidered late, and the currentbalance? (M)

24. Does the automated systemprovide for automaticacceleration of delinquentinstallment payment notesbased on the accelerationclause? (M)

25. Does the automated systemtrack and age receivables bytype? (M)

26. Does the automated systemprovide an automated interfacewith the core financial systemto record accrual of interest,administrative charges, andpenalties for delinquent loanaccounts? (M)



process –

apply collections

27. Does the automated systemapply collections according to

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

agency program receiptapplication rules to theappropriate liquidating orfinancing account? (M)

28. Does the automated systemrecord a partial, full, or latepayment indicator? (M)

29. Does the automated systemidentify payments that cannotbe applied? (M)

30. Does the automated systemdocument the reasons why thepayments cannot be applied?(M)

31. Does the automated systemprovide an automated interfacewith the core financial systemto record the collection? (M)

32. If the system processescollections, does it meet therequirements in the CoreFinancial System Requirementsrelated to collections? (M)

33. If the system processescollections, does it sendsummary data to the corefinancial system? (M)

Foreclose and liquidate

collateral requirements –

foreclose on collateral process—

prepare foreclosure materials

34. Does the automated systemprovide information oncollateral for use in theforeclosure process? (M)

35. Does the automated systemupdate the acquired loan

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

information store withadditional information obtainedduring the foreclosurepreparation process, such asrecent appraisal values andproperty condition? (M)

36. Does the automated systemcalculate outstanding principal,interest, and penalties for eachloan with collateral to beforeclosed? (M)



foreclose on collateral process—

foreclose

37. Does the automated systemprovide information to generatea foreclosure notice to theborrower? (M)

38. Does the automated systemtransmit information necessaryfor the foreclosure to theDepartment of Justice and/oragency Office of GeneralCounsel? (M)

39. Does the automated systemrecord the results of theforeclosure proceedings andtitle conveyance to the agency?(M)

40. Does the automated systemprovide an automated interfaceof data on acquired collateral tothe property managementsystem for management andliquidation of the property?(M)

41. Does the automated systemprovide an automated interface

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

to the core financial system torecord the value of the propertyacquired and to reduce thereceivable amount? (M)



manage/dispose of collateral

process –

manage collateral

42. Does the automated systemgenerate payments to propertymanagement contractors forservices rendered? (M)

43. Does the automated systemtrack, record, and classifyoperations and maintenanceexpenses related to the acquiredcollateral? (M)

44. Does the automated systemdocument rental income andother collections related to theacquired collateral? (M)

45. Does the automated system postthe expenses and income to thecore financial system throughan automated interface? (M)



manage/dispose of collateral

process –

dispose of collateral

46. Does the automated systemupdate the acquired loaninformation store to recordreceipts resulting from theliquidation of acquired collateraland the disposition of thecollateral? (M)

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

47. Does the automated systemidentify any deficiency balancesremaining for the loan aftercollateral liquidation for furthercollection activities? (M)

48. Does the automated systemprovide an automated interfaceto the core financial system andthe property managementsystem to record disposal of theproperty and associatedreceipts? (M)

Internal management


49. Are the following minimuminternal managementinformation requirementsavailable to agency creditprogram managers anddesignated internal reviewofficials on a periodic or on anas requested basis:

Guaranteed loan claimactivity?

Summary data of claimlosses paid out?

Detailed transactionhistory?

Standard managementcontrol/activity?

Exceptions? Portfolio sale historical

payments? Portfolio sale performance? Collateral management

activity and expense? (M)

50. Has the agency determined thespecific managementinformation necessary tomanage its credit programs

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

based on the agency’s missionand applicable statutoryrequirements? (M)

51. Does the agency maintainfinancial accountinginformation at appropriatelevels of summary (transaction,loan history, risk category,cohort, and account) forcomputational and reportingpurposes? (M)


Internal management


guaranteed loan claim activity

53. Is the summary used to monitortrends in claim activity overtime? (M)

54. Is the information presented atthe cohort level for the currentyear and prior years? (M)

Internal management


summary data of claim losses

paid out

55. Is the summary used tocompare the estimated claimlosses of guaranteed loanprograms to the actual lossesincurred by the program? (M)

Internal management



______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

56. Does the summary providedetailed loan account data andpayment transaction activity togive a detailed history of appliedand unapplied payments? (M)

Internal management


standard management

control/activity

57. Does the summary track thestatus of all loan accounts bysummarizing loan activity atvarious critical points of theloan cycle? (M)

58. Does the collection processsummarize payment activity toallow agency management tomonitor the effectiveness ofeach activity in the collectionprocess? (M)

59. Is the delinquency informationsummarized to highlightdelinquent debt (collateralizedand noncollateralized) andmodified debt? (M)

60. Is this data summary producedperiodically? (M)

61. Does the summary provideinformation for preparing theSF-220-9 and SF-220-8? (M)

Internal management


exceptions

62. Does the summary identifydeficiencies that have occurredin the routine processing andmonitoring of account status?Examples of exceptions include

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

unapplied payments anddelinquent accounts not eligiblefor debt collection tools. (M)

63. Is the summary generallyproduced periodically? (M)

Internal management


portfolio sale historical

payments

64. Does the summary provide adetailed payment history foreach loan included in theportfolio selected for sale?Historical payment data iscritical in order to assess theinvestment value of theportfolio to be offered for saleand in determining the structureand terms of the sale. (M)

Internal management


portfolio sale performance

65. Does the summary provide therating agencies and financialadvisors with statistics to moreeffectively evaluate portfoliocharacteristics performance?Statistics include loan-to-valueratios, effective yields, and lossestimates. (M)

Internal management


collateral management activity

and expense

66. Does the summary providedetailed and summary data ofcollateral management activityand expense data for monitoringcollateral management activities

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

that affect the value of theagency-owned property prior todisposition? (M)

67. Is all income earned and areexpenses incurred while thecollateral is in the agency’spossession are these recordedand tracked to support theagency’s ability to recover theexpenses? (M)

______________________________________________________________________________


______________________________________________________________________________


Delinquent debt collection/

troubled debt servicing

Yes/no

na Explanation

1. Does the agency thatrepurchases and services itsguaranteed loans or is assignedcollection rights when lossclaims are paid comply with theDebt collection ImprovementAct of 1996? (M)

2. Has the agency established acollection strategy consistentwith its statutory programauthority that seeks to returnthe debtor to a current paymentstatus or, failing that, maximizethe collections that can berealized? (M)


collection actions process –

report delinquent debt

3. Does the automated systemidentify delinquent commercialand consumer accounts forreporting to credit bureaus(preferably by electronicinterface) by comparingreporting criteria to delinquentloan data? (M)

4. Does the automated systemcalculate outstanding balances,including interest, penalties, andadministrative charges, andinclude this information incredit bureau records? (M)

5. Does the automated systemgenerate (or include in demandletters) a notice to inform theborrower of the referral of adelinquent debt to a creditbureau in accordance withregulations? (M)

______________________________________________________________________________


______________________________________________________________________________




Yes/no

na Explanation

6. Does the automated systemmaintain a record of eachaccount reported to creditbureaus to allow tracking ofreferred accounts? (V)

7. Does the automated systemidentify delinquent commercialand consumer accounts forreporting to CAIVRS bycomparing reporting criteria todelinquent loan data? (V)

8. Does the automated systemgenerate (or include in demandletters) a notice to inform theborrower of the referral of adelinquent debt to CAIVRS inaccordance with regulations?(V)

9. Does the automated systemprepare data on appropriatemedium, on a monthly basis, ofdelinquent debtors to beincluded in the CAIVRSdatabase? (V)



contact with the debtor

10. Does the automated systemgenerate and transmit dunningletters to debtors with past-dueloan accounts? (M)

11. Does the automated systemidentify debtors who do notrespond to dunning letterswithin a specified time period?(M)

12. Does the automated systemtrack demand letters andborrower responses to

______________________________________________________________________________


______________________________________________________________________________




Yes/no

na Explanation

document borrower dueprocess notification (andborrower willingness and abilityto repay debt)? (M)

13. Does the automated systemtrack and document debtorappeals received in response todemands for payment? (M)

14. Does the system provideautomated support to thecollection process? (M)

15. If so, is support provided foractivities such as contacting adelinquent borrower by phone;documenting contacts with adebtor and the results;documenting installmentpayments, reschedulingagreements, and debtcompromise; generatingmanagement reports; andtracking the performance ofindividual agency collectors?(M)



refer for Treasury offset

16. Does the automated systemidentify accounts eligible forreferral to the Treasury offsetprogram (TOP)? (M)

17. Does the automated systemgenerate written notification tothe borrower that includes thefollowing:

The nature and the amountof the debt?

The intention of the agencyto collect the debt through

______________________________________________________________________________


______________________________________________________________________________




Yes/no

na Explanation

administrative offset? An explanation of the rights

of the debtor? An offer to provide the

debtor an opportunity toinspect and copy therecords of the agency withrespect to the debt?

An offer to enter into awritten repaymentagreement with the agency?(M)

18. Does the automated systemidentify, at the end of thenotification period, the debtorswho remain delinquent and areeligible for referral? (M)

19. Does the automated systemoffset delinquent debtsinternally before referral toTOP, where applicable? (M)

20. Does the automated systemtransmit to TOP eligible newdebts, and increase, decrease,or delete previously reporteddebts? (M)

21. Does the automated systemapply collections receivedthrough the TOP process todebtor accounts in accordancewith applicable paymentapplication rules? (M)

22. Does the automated systemrecord offset fees in accordancewith agency programrequirements? (M)

23. Does the automated systemupdate the loan informationstore to reflect TOP status?(M)

______________________________________________________________________________


______________________________________________________________________________




Yes/no

na Explanation

24. Does the automated systemupdate the core financial systemto record collections from TOP?(M)

25. Does the automated systemprocess agency refunds given toborrowers erroneously andoffset and transmit thisinformation to Treasury ontime? (M)

26. Does the automated systemrecord refunds given byTreasury and adjust the loaninformation store accordingly?(M)



garnishment of nonfederal

wages

27. Does the agency give the debtorat least 30-days written notice ofits intent to initiate garnishmentproceedings? (M)

28. Does the automated systemgenerate a written noticeinforming the borrower of theagency’s intention to initiateproceedings to collect the debtthrough deductions from pay,the nature and amount of thedebt to be collected, anddebtors’ rights? (M)

29. Does the automated systemdocument that the wagegarnishment order was sent tothe employer? (M)

30. Does the automated systemprovide an ad hoc reportingcapability needed to monitor the

______________________________________________________________________________


______________________________________________________________________________




Yes/no

na Explanation

amounts recovered throughnonfederal wage garnishment?(M)

31. Does the automated systemdocument that the agencyprovided debtors with a hearing,when requested? (M)

32. Does the automated systeminterface with the core financialsystem to record receiptsremitted to the agency? (M)

33. Does the automated systemapply collections receivedthrough wage garnishmentaccording to agency applicationrules? (M)



refer to collection agencies

34. Does the automated systemcompare delinquent accountdata to agency programcollection and agency referralcriteria to select delinquent loanaccounts for referral tocollection agencies? (M)

35. Does the automated system sortand group delinquent loanaccounts based on type of debt(consumer or commercial), ageof debt, and location of debtor?(M)

36. Does the automated systemcalculate outstanding interest,penalties, and administrativecharges for each delinquent loanaccount to be referred? (M)

______________________________________________________________________________


______________________________________________________________________________




Yes/no

na Explanation

37. Does the automated systemassign selected delinquent loanaccount groupings toappropriate collection agenciesbased on collection agencyselection criteria for agencyprograms? (M)

38. Does the automated systemdocument that the delinquentaccount has been referred to acollection agency? (M)

39. Does the automated systemgenerate and receive electronictransmissions of accountbalance data and status updatesto and from collection agencies?(M)

40. Does the automated systemrecord receipts remitted to thecollection agency andforwarded to the agency? (M)

41. Does the automated systemupdate the loan informationstore to reflect receipts,adjustments, and other statuschanges, including rescheduling,compromise, and otherresolution decisions? (M)

42. Does the automated systemaccept and match collectionagency invoices with agencyrecords? (M)

43. Does the automated systemgenerate payment to thecollection agency for servicesrendered through the corefinancial system? (M)

44. Does the automated systemrequest, reconcile, and record

______________________________________________________________________________


______________________________________________________________________________




Yes/no

na Explanation

returned accounts fromcollection agencies? (M)

45. Does the automated systeminterface with the core financialsystem to record collectionsprocessed through collectionagencies? (M)



refer for litigation activities

46. Are referrals to the Departmentof Justice (DOJ) made inaccordance with the FederalClaims Collections Standards?(M)

47. Does the automated systemcompare delinquent loanaccount information against theagency’s litigation referralcriteria to identify delinquentloan accounts eligible forreferral? (M)

48. Does the automated systemsupport identification ofaccounts to be referred tocounsel for filing of proof ofclaim based on documentationthat a debtor has declaredbankruptcy? (M)

49. Does the automated systemprovide an electronic interfacewith credit bureaus to obtaincredit bureau reports that willenable assessment of thedebtor’s ability to repay before aclaim is referred to legalcounsel? (M)

50. Does the automated systemcalculate the outstanding

______________________________________________________________________________


______________________________________________________________________________




Yes/no

na Explanation

balance, including principal,interest penalties, andadministrative charges, for eachdelinquent loan account to bereferred to legal counsel? (M)

51. Does the automated systemgenerate the claims collectionlitigation report (CCLR)? (M)

52. Does the CCLR capturecollection actions and currentdebtor information andtransmit this information toDOJ? (M)

53. Does the automated systemsend and receive electronictransmissions of account dataand status updates to and fromDOJ’s Central Intake Facility orthe agency’s Office of GeneralCounsel’s (OGC) automatedsystem for referrals? (M)

54. Does the automated systemupdate loan status to reflectreferral for litigation so that theloan can be excluded from othercollection actions and to alertthe agency to obtain approvalfrom counsel before acceptingvoluntary debtor payment? (M)

55. Does the automated systemtrack filing of pleadings andother motions, including proofsof claims in bankruptcy, toensure swift legal action and tomonitor litigation activity? (M)

56. Does the automated systemmatch agency litigation referralswith the DOJ list of agencylitigation referrals? (M)

______________________________________________________________________________


______________________________________________________________________________




Yes/no

na Explanation

57. Does the automated systemrecord and track recovery ofjudgment decisions? (M)

58. Does the automated systemupdate the loan informationstore to reflect receipts andadjustments? (M)

59. Does the automated systeminterface with the core financialsystem to record any collectionsresulting from litigation? (M)


write-off and close-outs

process –

identify and document accounts

selected for write-off

60. Does the automated systemcompare delinquent loanaccount information to agencyprogram write-off criteria toselect delinquent loan accountsfor possible write-off? (M)

61. Does the automated systemclassify debtors based onfinancial profile and ability torepay? Indicators of thefinancial well-being of a debtorinclude debtor financialstatements, credit bureaureports, and payment receipthistory. (M)

62. Does the automated systemproduce a CCLR for each loanaccount to be referred to agencycounsel or DOJ for approval oftermination of collectionaction? (M)

______________________________________________________________________________


______________________________________________________________________________




Yes/no

na Explanation

63. Does the automated systemupdate the loan status to reflectthe referral? (M)

64. Does the automated systemupdate the loan informationstore to reflect approval ordisapproval by agency counselor the DOJ for termination ofthe collection action? (M)

65. Does the automated systemupdate the loan informationstore and provide an automatedinterface with the core financialsystem to record the write-off ofthe receivable? (M)



process –

monitor written-off accounts

66. Does the automated systemmaintain a suspense file ofinactive (written-off) loanaccounts? (M)

67. Does the automated systemreactivate written-off loanaccounts at a system user’srequest if the debtor’s financialstatus or the account statuschanges? (M)



process –

document close-out of

uncollectible accounts

68. Does the automated systemcompare loan account data toagency close-out criteria toidentify debtor accounts eligible

______________________________________________________________________________


______________________________________________________________________________




Yes/no

na Explanation

for close-out and 1099-Creporting? (M)

69. Does the automated systemprepare and send a Form 1099-Cto the Internal Revenue Service(IRS) if the debtor has notresponded within the requiredtime period? (M)

70. Does the automated systemupdate the loan informationstore to reflect receipts,adjustments, and other statuschanges, including rescheduling,compromise, and otherresolution decisions? (M)

71. Does the automated systemretain electronic summaryrecords of close-out accountactivity for 5 years for use inagency screening of new loanapplications? (M)


(Note: There are no collateralrequirements applicable to theportfolio management function.)

Internal management


72. Are the internal managementinformation requirements(detailed transaction history,standard managementcontrol/activity, exceptions,trend analysis/performance,collection contractorcompensation) available toagency credit programmanagers and designatedinternal review officials on a

______________________________________________________________________________


______________________________________________________________________________




Yes/no

na Explanation

periodic or on an as requestedbasis? (M)

73. Has the agency determined thespecific managementinformation needs necessary tomanage its credit programsbased on the agency missionand applicable statutoryrequirements? (M)

74. Is the agency maintainingfinancial accountinginformation at appropriatelevels of summary (transaction,loan history, risk category,cohort, and account) forcomputational and reportingpurposes? (M)


Internal management



76. Does the detailed transactionhistory summary providedetailed account information bycohort for internal control andtracking, and, in the absence ofan electronic interface toexternal entities, can the historybe used to transfer data fromthe agency to the external entityto facilitate delinquent debtcollection actions? (M)

77. Are separate data summariesproduced for offset referrals,collection agency referrals,

______________________________________________________________________________


______________________________________________________________________________




Yes/no

na Explanation

litigation referrals, and write-offs and close-outs? (M)

Internal management


standard management

control/activity

78. Does the standard managementcontrol/activity summary trackthe status of all referral activityincluding initial referrals, statusupdates, and account balanceupdates? (M)

79. Are separate and summary listsproduced for individual andtotal reporting and referralactivity? (M)

Internal management


exceptions

80. Does the exceptions summaryhighlight deficiencies that haveoccurred in the referralprocess? Examples of subjectsfor periodic exceptioninformation include delinquentaccounts eligible for reportingthat have not been reported,defaulted rescheduled loans,account referrals that can notbe processed, collection agencyresolution percentage, accountswithout foreclosure or collateralmanagement activity for aspecified period of time,accounts referred for litigationfor which no litigation decisionhas been recorded, anddelinquent accounts withoutactivity for long periods of timethat have not been written-off.(M)

______________________________________________________________________________


______________________________________________________________________________




Yes/no

na Explanation

Internal management


trend analysis/performance

81. Does the trend analysis/performance summary highlightthe effectiveness of differentdelinquent debt collectiontechniques over time? (M)

82. Does the summary indicate theeffectiveness of using differenttypes of collection actions fordifferent credit programs? (M)

Internal management


collection contractor

compensation

83. Does the collection contractorcompensation summary providemonthly account analyses tocalculate, track, and verifycompensation for eachcontractor providing collectionservices to an agency? Thisinformation aids in theverification of invoices receivedfrom the contractor andhighlights the differences in feeschedules among contractors.(M)

______________________________________________________________________________


______________________________________________________________________________


Treasury cross-servicing

Yes/no

na Explanation

1. Has the agency entered into aletter of agreement withTreasury Financial ManagementService (FMS) authorizing FMSto provide debt collectionservices before referring debt toa debt collection center? (M)

2. Does the agreement detail thelimitations and parametersrequired for the compromise,settlement, or termination ofcollection action? (M)

3. If applicable, has the agencysubmitted a proposal toTreasury that contains thedocumentation supporting itsrequest to be designated as adebt collection center? (M)

4. Does the proposal indicate whattypes of debts the agencywishes to cross-service and itssuccess at collecting its owndelinquent accounts? (M)

5. Has the agency discontinued allservicing activities at the timethe debt is referred to Treasuryfor cross-servicing? (M)

Identify accounts selected

6. Does the automated systemcompare delinquent loanaccount information tostatutory criteria to selectdelinquent loan accounts forpossible referral? (M)

7. Does the automated systemgenerate notification to thedebtor of the agency’s intent to

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

refer the debt to a debtcollection center? (M)

8. Does the automated systemupdate the loan informationstore? (M)

9. Does the automated systemidentify accounts that can nolonger be serviced by agencypersonnel? (M)

Monitor accounts referred to

the debt collection center

10. Does the automated systemidentify accounts with monetaryadjustments that must bereported to the debt collectioncenter? (M)

11. Does the automated systemprovide an ad hoc reportingcapability needed to monitor theaccounts referred to a debtcollection center and theamounts recovered? (M)

12. Does the automated systeminterface with the core financialsystem to record receiptsremitted to the agency? (M)

13. Does the automated systemapply collections received fromthe debt collection centeraccording to agency applicationrules? (M)

14. Does the automated systemrecord collection fees inaccordance with agencyprogram requirements? (M)

15. Does the automated systemprocess agency or debt

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

collection center refunds, notifythe debt collection center asappropriate, and update theloan information store? (M)

16. Does the automated systemnotify the debt collection centerof adjustments, recalls of debt,or collections received by theagency on the referred debt?(M)

17. Does the automated systemremove from the accounting andfinancial records accounts thatthe debt collection centerrecommends should be writtenoff? (M)

Use an agency authorized to

cross-service

18. Does the automated systemidentify the volume and type ofdebts serviced? (M)

19. Does the automated systemidentify the tools used by theagency to collect its own debt?(M)

20. Does the automated systemprovide one or more years ofinformation on the average ageof debt over 180 days? (M)

21. Does the automated systemcalculate the amount of debtcollected using variouscollection tools? (M)

22. Does the automated systemaccrue late charges, as requiredby the referring agency? (M)

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

23. Does the automated systemprovide information to thereferring agency sufficient forthe referring agency tosatisfactorily complete theReport on Receivables DueFrom the Public? (M)

24. Does the automated systemtrack, by portfolio, age of debtreferred, dollar and number ofreferrals, collections on referreddebts and monthly report toTreasury? (M)

25. Does the automated systemprovide information to thereferring agency as needed, i.e.,collections received? (M)

26. Does the automated systemprovide ad hoc reportingcapability needed to satisfyreferring agencies’ uniqueinformation requests, such aslength of workout agreementsand percent of debt that can becompromised? (M)

Internal management


27. Are the internal managementinformation requirementsavailable to agency creditprogram managers anddesignated internal reviewofficials on a periodic or on anas requested basis? (M)

28. Has the agency determined thespecific managementinformation needs necessary tomanage its credit programsbased on the agency mission

______________________________________________________________________________


______________________________________________________________________________



Yes/no

na Explanation

and applicable statutoryrequirements? (M)

29. Does the agency maintainfinancial accountinginformation at appropriatelevels of summary forcomputational and reportingpurposes (transaction, loanhistory, risk category, cohort,and account)? (M)


______________________________________________________________________________


______________________________________________________________________________


Other reporting requirements

Yes/no

na Explanation

Transaction history

1. Is the system capable ofproducing a completetransaction history of eachloan? (M)

External reporting

requirements

2. Is the system capable ofsupporting the externalreporting requirements of OMBand Treasury, including thoseassociated with the FederalCredit Reform Act (FCRA) of1990 and the CFO Act of 1990?(M)

______________________________________________________________________________


______________________________________________________________________________


Records retention

Yes/no

na Explanation

1. Is the destruction of agencyrecords, created within thefederal government, approvedby NARA per 36 CFR 1228? Forquestions regarding thedisposition of federal records,contact:

Life Cycle Management DivisionNational Archives and Records Administration7th Street and Pennsylvania Avenue NWWashington, DC 20408.

The telephone number is (301)713-7110. (M)

(193005)

______________________________________________________________________________

Related Products

______________________________________________________________________________


These related products address three main categories: internal control, financialmanagement systems, and financial reporting (accounting standards). We havedeveloped these guidelines and tools to assist agencies in improving or maintainingeffective operations and financial management.

Internal Control

Standards for Internal Control Streamlining the Payment Processin the Federal Government While Maintaining Effective InternalGAO/AIMD-00-21.3.1, November 1999. Control

GAO/AIMD-00-21.3.2, May 2000.

Determining Performance andAccountability Challenges and HighRisksGAO-01-159SP, November 2000.

Financial Management Systems

Framework for Federal Financial Inventory System ChecklistManagement System Checklist GAO/AIMD-98-21.2.4, May 1998.GAO/AIMD-98-21.2.1, May 1998.

System Requirements for Managerial Core Financial System RequirementsCost Accounting Checklist ChecklistGAO/AIMD-99-21.2.9, January 1999. GAO/AIMD-00-21.2.2, February 2000.

Human Resources and Payroll Direct Loan System RequirementsSystems Requirements Checklist ChecklistGAO/AIMD-00-21.2.3, March 2000. GAO/AIMD-00-21.2.6, April 2000.

Travel System Requirements Seized Property and Forfeited AssetsChecklist Requirements ChecklistGAO/AIMD-00-21.2.8, May 2000. GAO-01-99G, October 2000.

Financial Reporting (Accounting Standards)

We anticipate completing two itemsunder this category by late summer2001.

These documents are available on the Internet on GAO’s Home Page (www.gao.gov)under “Other Publications, Accounting and Financial Management.” They can also beobtained from GAO, 700 4th Street NW, Room 1100, Washington DC 20548, or by calling(202) 512-6000 or TDD (202) 512-2537.

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