The Division of Capital Investment (DCI) is part of the Office of Indian Energy and Economic Development (IEED) and its key responsibility is managing the Loan Guaranty, Insurance and Interest Subsidy Program (Program). We evaluated whether DCI had controls in place to effectively manage its loan guarantee program.
We found that DCI’s controls were inadequate and did not provide reasonable assurance of meeting the loan guarantee program’s purpose and activities. As a result, we found loan guarantees that DCI approved without proof of benefit to Indian communities and in excess of the monetary cap required by regulation. This created unnecessary risk for loans already considered risky. These issues occurred because IEED has provided limited oversight over the program, and DCI management believes that internal controls do not pertain to programs of this size. Appropriate controls are important due to the level of risk of this program.
We made 13 recommendations to assist IEED with improving DCI’s internal controls and clarifying responsibilities of DCI and its staff. IEED concurred with all of our recommendations.