Guaranteed Loan System Requirements: Checklist for Reviewing	 
Systems Under the Federal Financial Management Improvement Act	 
(01-MAR-01, GAO-01-371G).					 
								 
The Federal Financial Management Improvement Act (FFMIA) requires
that agencies implement and maintain financial management systems
that substantially comply with federal financial management	 
system requirements. These requirements are detailed in the	 
series issued by the Joint Financial Management Improvement	 
Program and the Office of Management and Budget guidance. GAO	 
issued a checklist that reflects the Joint Financial Management  
Improvement Program's Revised Guaranteed Loan System Requirements
to assist (1) agencies in implementing and monitoring their	 
guaranteed loan systems and (2) managers and auditors in	 
reviewing agency guaranteed loan systems to determine if they	 
substantially comply with FFMIA. This checklist is not required  
to be used in assessing guaranteed loan systems. Rather, it is	 
provided as a tool for use by experienced staff and is one in a  
series of documents GAO has issued to assist agencies in	 
improving or maintaining effective operations.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-371G					        
    ACCNO:   A00720						        
    TITLE:   Guaranteed Loan System Requirements: Checklist for       
             Reviewing Systems Under the Federal Financial Management         
             Improvement Act                                                  
     DATE:   03/01/2001 
  SUBJECT:   Government guaranteed loans			 
	     Loan accounting systems				 
	     Auditing standards 				 
	     Financial management systems			 
	     Auditing procedures				 
	     Internal controls					 
	     JFMIP Framework for Federal Financial		 
	     Management Systems 				 
								 

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GAO-01-371G

GAO United 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

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

PREFACE

______________________________________________________________________________
March 2001 The Federal Financial Management Improvement Act (FFMIA) of 1996
requires, among other things, that agencies implement and maintain financial
management systems that substantially comply with federal financial
management system requirements. These requirements are detailed in the
Federal Financial Management System Requirements series issued by the Joint
Financial Management Improvement Program (JFMIP), in Office of Management
and Budget (OMB) Circular A- 127, Financial Management Systems, and in OMB's
Revised Implementation Guidance for the Federal Financial Management
Improvement Act (FFMIA) of 1996, issued January 4, 2001. JFMIP intends for
the

requirements to promote understanding of key financial management systems
concepts and requirements, to provide a framework for establishing
integrated financial management systems to support program and financial
managers, and to describe specific requirements of financial management
systems.

We are issuing this checklist that reflects JFMIP's revised Guaranteed Loan
System Requirements (March 2000) to assist (1) agencies in implementing and
monitoring their guaranteed loan systems and (2) managers and auditors in
reviewing agency guaranteed loan systems to determine if they substantially
comply with FFMIA. This checklist is not required to be used in assessing
guaranteed loan systems. Rather, it is provided as a tool for use by
experienced staff and is one in a series of documents we have issued to
assist agencies in improving or maintaining effective operations. (See the
last page of this document for a list of related products.) This checklist,
the JFMIP source document, and the two previously mentioned OMB documents
should be used concurrently. Those using this tool must apply experienced
judgment in its interpretation and application. They must consider the
impact of the completed checklist on an entire guaranteed loan system and
whether the system, as a whole, substantially complies with requirements.

Additional copies of the checklist can be obtained from the U. S. General
Accounting Office, 700 4th Street NW, Room 1100, Washington, DC 20548, or by
calling (202) 5126000, or TDD (202) 512- 2537. This checklist replaces GAO's
previously issued exposure draft of the Guaranteed Loan System Requirements
Checklist (GAO/ AIMD- 21.2.7, August 2000) and is available on the Internet
on GAO's Home Page ( www. gao. gov) under “Other Publications,
Accounting and Financial Management.” Hard copies of the JFMIP
document also can be obtained from GAO or can be downloaded from the JFMIP
website at JFMIP. gov under “JFMIP Documents, System
Requirements.”

Jeffrey C. Steinhoff Managing Director Financial Management and Assurance

Page 2 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
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Page 3 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01)
______________________________________________________________________________

CONTENTS

______________________________________________________________________________
Overview 4

Authoritative Guidance 5 How to Use This Checklist 6

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

Related Products 93

Figure

Figure 1: Agency Systems Architecture 4

Abbreviations

CAIVRS Credit Alert Interactive Voice Response System CFO chief financial
officer CM configuration management COTS commercial off- the- shelf DOJ
Department of Justice FCRA Federal Credit Reform Act FFMIA Federal Financial
Management Improvement Act FMFIA Federal Managers' Financial Integrity Act
FMS Financial Management Service IRS Internal Revenue Service JFMIP Joint
Financial Management Improvement Program NPR National Performance Review OGC
Office of the General Counsel OMB Office of Management and Budget OPM Office
of Personnel Management SF standard forms SFFAS Statement of Federal
Financial Accounting Standards SSN Social Security Number TIN taxpayer
identification number TOP Treasury offset program

Page 4 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01) (BLANK)

Page 5 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01)
______________________________________________________________________________

OVERVIEW
______________________________________________________________________________

The Federal Financial Management Improvement Act (FFMIA) of 1996 requires,
among other things, that agencies implement and maintain financial
management systems that substantially comply with federal financial
management system requirements. These system requirements are detailed in
the Federal Financial Management Systems Requirements series issued by the
Joint Financial Management Improvement Program (JFMIP) 1 and Office of
Management and Budget (OMB) Circular A- 127, Financial Management Systems.
JFMIP requirements documents describe the federal financial

system architecture as (1) core financial system, (2) managerial cost
accounting, and (3) 13 subsidiary or mixed systems supporting agency
operations, not all of which are applicable to all agencies. 2 Figure 1 is
the JFMIP model that illustrates how these systems interrelate in an
agency's overall systems architecture.

Figure 1: Agency Systems Architecture Source: JFMIP G uaranteed Loan System
Requirements (March 2000). 1 JFMIP is a joint cooperative undertaking of
OMB, the General Accounting Office, the Department of Treasury, and the
Office of Personnel Management (OPM), working in cooperation with each other
and with operating agencies to improve financial management practices
throughout the government. The program was initiated in 1948 by the
Secretary of the Treasury, the Director of the Bureau of the Budget (now
OMB), and the Comptroller General and was given statutory authorization in
the Budget and Accounting Procedures Act of 1950. The Civil Service
Commission, now the Office of Personnel Management, joined JFMIP in 1966. 2
JFMIP has also issued the Framework for Federal Financial Management Systems
(FFMSR- 0, January 1995) that defines the framework for establishing and
maintaining

financial management systems to support management and deliver programs of
the federal government. GAO published a companion checklist, Framework for
Federal Financial Management System Checklist (GAO/ AIMD- 98- 21. 2.1, May
1998).

Page 6 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01) 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 System Requirements (March 2000)-- to assist (1) agencies in
implementing and monitoring their guaranteed loan systems and (2) managers
and auditors in reviewing agency guaranteed loan systems to determine if
they substantially comply with FFMIA. This checklist is not a requirement.
However, it is provided as a tool for use by experienced staff. This
checklist; the JFMIP source document; OMB Circular A- 127, Financial
Management Systems; and OMB's Revised Implementation Guidance for the
Federal Financial Management Improvement Act (FFMIA) of 1996, issued January
4, 2001, should be used

concurrently. Staff members who use this tool must apply experienced
judgment in its interpretation and application. They must consider the
impact of the completed checklist on the entire guaranteed loan system and
whether the system, as a whole, substantially complies with requirements.

Authoritative Guidance

OMB Circular A- 127 and OMB's implementation guidance provide the basis for
assessing compliance with FFMIA requirements which agencies use in order to
implement and maintain financial management systems that comply
substantially with federal requirements. The implementation guidance
identifies various criteria that an agency must meet to substantially comply
with these requirements. One of the criteria listed in the OMB guidance is
the JFMIP system requirements series.

The source of all the questions in this checklist is the JFMIP Guaranteed
Loan System Requirements (JFMIP- SR- 00- 01, March 2000). This document
provides high- level functional requirements for guaranteed loan systems
that will provide the capability for financial 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
December 1993 JFMIP Guaranteed Loan System Requirements document. The
primary purposes of this update are to reflect (1) changes in statutes,
regulations, and technology that have occurred since the document was
originally published (e. g., passage of the Chief Financial Officers Act of
1990, FFMIA of 1996), (2) changes brought about by the National Performance
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 existing published JFMIP standards and that changes in laws,
regulations, and standards and practices since the standards were issued are
not included in the checklist.

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

3 Thus far, the series includes the (1) Core Financial System Requirements,
(2) Inventory System 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 System Requirements, and
(10) Property Management Systems Requirements.

Page 7 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01) substantial compliance with system requirements under FFMIA. These
requirements

apply to existing systems in operation and new systems planned or under
development. The checklist uses “( M)” immediately following the
question to indicate that it is mandatory for the system to do that.

The value- added requirements describe optional features and may consist of
any combination of the following: (1) using state- of- the- art technology,
(2) employing preferred or best business practices, or (3) meeting the
special management needs of an individual agency. Agencies should consider
value- added features when judging systems options. The need for these
value- added features in agency systems is left to the discretion of each
agency head. The checklist uses “( V)” immediately following the
question 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)
and inspectors general with a means for determining whether their agencies'
financial management systems substantially comply with federal financial
management system requirements. The annual reporting required by 31 U. S. C.
3512( d) is one means of assisting agencies in the determination of
substantial compliance. Agencies can also use this checklist as a tool to
help determine compliance with federal financial management system
requirements.

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

The checklist contains three columns with the first citing the question. Use
the second column to answer each question “yes,”
“no,” or “na.” Use the third column to explain your
answer. A “yes” answer should indicate that the agency's
guaranteed loan system provides for the capability described in the
question. For each “yes” answer, the third column should contain
a brief description of how the guaranteed loan system satisfies that
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 third column should provide an explanation
and, where applicable, a reference to any related supporting documentation
(e. g., the agency is working on modifying or implementing its guaranteed
loan system to have the capability available in subsequent years; management
believes the capability is not cost effective and will not enhance the
guaranteed loan system's ability to manage operations). Cost- benefit
studies, or other reasoning, that supports a “no” answer should
be identified in the explanation column. If there are no cost- 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 and the extent to which the “no” answers inhibit the
entire guaranteed loan system from meeting substantial compliance.

Page 8 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01) Certain questions within the checklist may not be applicable to the
agency. Answer such

nonapplicable question( s) with “na” and provide an appropriate
explanation in the third column.

Page 9 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01)
______________________________________________________________________________

GUARANTEED LOAN SYSTEM REQUIREMENTS

______________________________________________________________________________
The guaranteed loan system requirements document provides an overview of
guaranteed loan system requirements (the checklist questions for this area
are drawn from pages 10–- 17 of the JFMIP source document);
introduction to functional requirements (the checklist questions for this
area are drawn from page 20 of the JFMIP source document); and functional
requirements for the seven functions described below: (1) lender management,
(2) guarantee extension and maintenance, (3) portfolio management, (4)
acquired loan servicing, (5) delinquent debt collection, (6) Treasury cross-
servicing, and (7) other reporting requirements and records retention
requirements (the checklist questions for this area are drawn from page 64
of the JFMIP source document).

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

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

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

4. Acquired loan servicing encompasses the procedures for default claim
review and payment in accordance with guarantee agreements and regulations,
as well as the invoicing and collection procedures for acquired loans and
the foreclosure and liquidation of property for collateralized loans
acquired by the government. (The checklist questions for this area are drawn
from pages 43– 50 of the JFMIP source document.)

5. Delinquent debt collection/ troubled debt servicing includes the recovery
of delinquent debt through the use of dunning letters, offset programs,
collection agencies, garnishment of nonfederal wages, litigation, and
termination of collection action on uncollectible debt. It also includes the
foreclosure and liquidation of property for collateralized loans acquired by
the government. (The checklist questions for this area are drawn from pages
51– 58 of the JFMIP source document.)

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

Page 10 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01) 7. Other reporting requirements provides for two types of reporting
(1) transaction

history and (2) external reporting requirements. (The checklist questions
for this area are drawn from page 63 of the JFMIP source document.)

The checklist questions follow the JFMIP source document. It should be noted
that not all questions will apply in all situations and, as with the use of
any checklist, professional judgment should be exercised. Using the JFMIP
source document and its “Appendix B: Glossary,” which defines
terms used, along OMB Circular A- 127, Financial Management Systems, and OMB
Revised Implementation Guidance for the Federal Financial Management
Improvement Act (FFMIA) of 1996, issued January 4, 2001, will help ensure

that the user is cognizant of the background information necessary to fully
understand the questions.

______________________________________________________________________________

Guaranteed Loan System Requirements

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

System overview Yes/ no na Explanation

1. Does the guaranteed loan system being designed and implemented, or in
use, operate in accordance with laws, regulations, and judicial decisions?
It is the responsibility of the agency to be knowledgeable of the legal
requirements governing its system. (M)

2. Do functional requirements not mandated by law, regulation, directive, or
judicial decision result in cost- effective systems that are in the interest
of the government? (M)

3. Have all possible alternatives for meeting the requirements been
considered? (M)

4. Has the agency carefully determined which value- added requirements are
necessary for each credit program? (M)

5. Has the agency developed an efficient, effective, and economical strategy
for interfacing, or logically integrating, its guaranteed loan systems (or
subsystems) with other systems (or subsystems) that provide information to,
or utilize information from, standard guaranteed loan systems? (M)

6. Are the data in optional processes consistent with standard guaranteed
loan systems that contain the official records for the agency? (M)

______________________________________________________________________________

Guaranteed Loan System Requirements

______________________________________________________________________________
Page 12 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01)

System overview Yes/ no na Explanation

Relationship with other systems

7. Is the system capable of interfacing with other financial management
systems (e. g., the core financial system, the managerial cost accounting
system, common processes for managing receivables, capabilities related to
collecting delinquent debt, and the property management system)?

(M)

8. Does the system interact with the core financial system to perform fund
control checks, initiate or record payments, and record the results of other
guaranteed loan- related financial transactions, and acknowledge receipt of
financial information exchange?

(M)

9. Does the system perform automatic system balancing?

(M)

10. Does the system balancing ensure that guaranty loan partners involved in
a financial information exchange agree on transaction number and dollar
values passed, processed, and rejected? (M)

11. Does the automated system balancing include cumulative subsidiary
account balancing to the general ledger? (M)

12. Does the automated system balancing ensure that guaranty loan partners
reflect the same picture of valid transactions

______________________________________________________________________________

Guaranteed Loan System Requirements

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Page 13 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01)

System overview Yes/ no na Explanation

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

13. Is the system capable of supporting managerial cost accounting and
credit subsidy reestimates? (M)

14. If the agency acquires property serving as collateral on a defaulted
guaranteed loan, does the system provide the property management system with
the information needed to manage and liquidate the collateral?

(M) Relationship with other systems – system interface functioning
verification

15. Does a team, independent of the development organization, perform all
verifications to ensure that the system is capable of interfacing with other
financial management systems? (M)

16. Does verification include intersystem testing to ensure that the system
can process incoming and outgoing data for other interfaces for the guaranty
loan program? This testing will ensure that the guaranty loan system can
accept data files, process them correctly, and transmit the necessary
transactions to other systems. (M)

17. Does verification include having all intersystem vendors involved with
the testing create and

______________________________________________________________________________

Guaranteed Loan System Requirements

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Page 14 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01)

System overview Yes/ no na Explanation

accept a comprehensive test plan? (M)

18. Does verification include having a team, independent of the development
organization, review requirements, test plans, and scenarios; monitor test
execution; and ensure that testing objectives are met? (M)

19. Does verification include the team, independent of the development
organization, working as a partner in the development effort, gaining
system- specific knowledge while reviewing processes, outputs, and
techniques to ensure compliance with procedures and quality results?

(M)

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

21. Are resolutions included in testing sign- off documentation when issues
are resolved? (M)

22. Does the review, other than test execution, include, at a minimum, the
following: requirements traceability matrix, functional requirements
document, detail design document, system specifications, and manual
procedures? (M)

Relationship with other systems –

system interface functioning verification –

______________________________________________________________________________

Guaranteed Loan System Requirements

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Page 15 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01)

System overview Yes/ no na Explanation

requirements traceability matrix

23. Is the system able to demonstrate that all development requirements are
incorporated into the final system output through the use of requirements
traceability matrices? (M)

24. Are the matrices submitted with the preliminary design document? (M)

25. Are the matrices updated with each subsequent step in the enhancement
effort (i. e., requirements should be traced through preliminary design,
detailed design, specifications, test plans, and test results)?

(M) Relationship with other systems –

system interface functioning verification –

functional requirements document

26. Does the system perform work needed to accomplish the specified
outcomes, achieve or exceed the specified performance standards, record and
reconcile money, and track report activity? (M)

Relationship with other systems –

system interface functioning verification –

detail design document

______________________________________________________________________________

Guaranteed Loan System Requirements

______________________________________________________________________________
Page 16 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01)

System overview Yes/ no na Explanation

27. Does the detail design fully consider requirements for hardware,
software, integration with other systems, security, telecommunications, data
management, manual procedures, quality assurance/ quality control (QA/ QC),
auditability, and capacity planning and management? (M)

28. Does the detail design document the design in system/ subsystem
specifications, program specifications, and database specifications? (M)

Relationship with other systems –

system interface functioning verification –

system specifications

29. Are system/ subsystem specifications, program specifications, and
database specifications all included within the detail design document? (M)

30. Do the specifications include, at a minimum, flowcharts, input/ output
processing, and file layouts? (M)

Relationship with other systems –

system interface functioning verification –

manual procedures

31. Are all system modifications or maintenance changes incorporated into
manual

______________________________________________________________________________

Guaranteed Loan System Requirements

______________________________________________________________________________
Page 17 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01)

System overview Yes/ no na Explanation

procedures and functions as necessary to keep the procedures up- to- date?
(M)

32. Does system testing ensure that all related manual procedures perform
according to system requirements? (M)

Relationship with other systems –

post- implementation testing

33. Are transactions reviewed to make sure that they are processing
correctly and that the data being produced are reliable after the system is
implemented? (M)

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

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

36. Are daily, monthly, quarterly, and fiscal/ calendar year- end reports
reviewed prior to dissemination, whenever possible, to ensure that the data
have been updated correctly?

(M) Relationship with other systems –

configuration management

37. Is configuration management (CM) used to establish and maintain the
security and integrity of the system throughout its development life cycle?
(M)

______________________________________________________________________________

Guaranteed Loan System Requirements

______________________________________________________________________________
Page 18 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01)

System overview Yes/ no na Explanation

38. Does the comprehensive CM provide all project team members with a
consistent level of understanding of the system engineering process,
maintain systems stability, and reduce technical risk associated with the
development effort? (M)

Data requirements

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

Lender/ servicer information? Guarantee information? Claim information?
Acquired loan information? Program criteria? Core financial system
information? External organizational information?

In the JFMIP document, a grouping of related types of data is referred to as
an information store. The term information store (rather than database or
file) is used to avoid any reference to the technical or physical
characteristics of the data storage medium. (M)

40. Has the agency determined the actual data storage (physical databases
and files) during system development and implementation based on the loan
program's statutory requirements and the agency's technical environment,
processing volumes,

______________________________________________________________________________

Guaranteed Loan System Requirements

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Page 19 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01)

System overview Yes/ no na Explanation

organizational structure, and degree of system centralization or
decentralization? (M)

Data requirements –

information stores internal to the guaranteed loan system –

lender/ servicer information

41. Does the information store include the following data:

Lender/ servicer application data? Lender/ servicer review data? Approved
lender/ servicer data? Lender/ servicer status?

(M) Data requirements –

information stores internal to the guaranteed loan system –

guarantee information

42. Does the information store include the following data:

Guarantee data (e. g., lender, loan amount, guarantee level, loan status,
subsidy information, interest rate, and loan terms)? Collateral data (e. g.,
appraised value, status; mandatory unless specifically excluded by program
requirements)? Borrower data (e. g., borrower's name, address, social
security number (SSN) or taxpayer identification number (TIN), financial
data)?

______________________________________________________________________________

Guaranteed Loan System Requirements

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Page 20 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01)

System overview Yes/ no na Explanation

Guarantee fees due and/ or collected? (M)

43. Does the information store include rejected guarantee data (e. g.,
lender, reason for rejection)? (V)

Data requirements –

information stores internal to the guaranteed loan system –

claim information

44. Does the information store include the following data:

Claim application data? Claim status? (M)

Data requirements –

information stores internal to the guaranteed loan system –

acquired loan information

45. Does the information store include the following data:

Acquired loan data? Acquired loan status? Acquired loan collateral data?
Payment history? (M)

Data requirements –

information stores internal to the guaranteed loan system –

program criteria

46. Does the information store include the following data:

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

______________________________________________________________________________

Guaranteed Loan System Requirements

______________________________________________________________________________
Page 21 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01)

System overview Yes/ no na Explanation

Creditworthiness? (Mandatory unless specifically excluded by program
requirements.) Borrower eligibility? Guarantee fees? Fee penalty? Claim
application evaluation? Invoicing? Receipt application rules? Debt
collection? CAIVRS (credit alert interactive voice response system)
referral? Credit bureau reporting? Treasury offset referral? Collection
agency selection? Litigation referral? Write- off? (M)

47. Does the information store include the following data:

Close- out? Loan sale? (V)

Data requirements –

information stores external to the guaranteed loan system –

core financial system information

48. Does the information store include the following data:

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

______________________________________________________________________________

Guaranteed Loan System Requirements

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Page 22 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01)

System overview Yes/ no na Explanation

Data requirements –

information stores external to the guaranteed loan system –

external organizational information

49. Does the information store include the following data:

Lender rating data? Treasury interest rates? SF- 1151s (Non- Expenditure
Transfer Authorization) and SF- 1081s (Voucher and Schedule of Withdrawals
and Credits)? Loan status? Sale approval? Collection activities and results?
Write- off approval? Foreclosure data? (M)

50. Does the information store include sale proceeds? (V)

______________________________________________________________________________

Guaranteed Loan System Requirements

______________________________________________________________________________
Page 23 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01)

Introduction to functional requirements Yes/ no

na Explanation

1. Are the following functions supported by the system?

Lender management? Guarantee extension and maintenance? Portfolio
management? Acquired loan servicing? Delinquent debt collection? Treasury
cross- servicing? Other reporting requirements? (M)

______________________________________________________________________________

Guaranteed Loan System Requirements

______________________________________________________________________________
Page 24 GAO- 01- 371G – Guaranteed Loan System Requirements Checklist
(3/ 01)

Lender management Yes/ no na Explanation

General requirements –

lender eligibility process –

process lender application

1. Does the automated system record and update lender application
information, ensuring that all required data are present and valid (e. g.,
ninedigit numeric taxpayer identification number (TIN))?

(M)

2. Does the automated system document that any required lender application
fee has been received and calculated correctly? (M)

3. Does the automated system provide an automated interface with the core
financial system to record the receipt of any application fee? (M)

General requirements –

lender eligibility process –

evaluate lender eligibility

4. Does the automated system compare lender application information against
information on firms currently debarred/ suspended from participating in a
government contract or delinquent on a debt to the government? (M)

5. Does the automated system compare lender application information against
information concerning the lender's financial credentials from banking
regulatory agencies,

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rating services, and other information sources? (M)

6. Does the automated system compare lender application information against
lender performance data? (M)

7. Does the automated system compare lender application information against
qualification requirements for principal officers and staff? (V)

General requirements –

lender eligibility process –

approve/ disapprove lender application

8. Has the agency consummated an agreement in accordance with the
requirements defined in OMB Circular A- 129, Policies for Federal Credit
Programs and Non- Tax Receivables (January

1993), for approved lenders?

(M)

9. Does the automated system update the lender information store to reflect
the agency's decision on the lender application? (M)

10. Does the automated system maintain data on lender disapprovals as an
historical reference to support effective monitoring of future lenders?

(M)

11. Does the automated system generate and electronically transmit a notice
to inform the lender of approval or

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disapproval of the lender's application? (V)

12. Does the automated system record text comments related to approval or
disapproval of the lender application? (V)

General requirements –

lender eligibility process –

establish lender agreement

13. Does the agreement (agency's contractual relationship with the approved
lender) state program requirements, lender and agency responsibilities, due
diligence standards, reporting standards, and loan servicer participation
requirements?

(M)

14. Does the automated system record relevant data concerning the lender
agreement? (M)

15. Does the automated system document that the lender agreement has been
consummated by the agency and lender? (M)

16. Does the automated system provide a tracking mechanism to identify
expiring agreements needing renewal? (M)

17. Does the automated system generate the lender agreement for signature by
the lender? (V)

18. Are annual or special reviews conducted for high- volume lenders/
servicers or lenders/ servicers with poor performance? (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 lenders and servicers specify that loan servicers
must meet applicable participation requirements and performance standards?
(M)

20. Does the agreement also specify that servicers acquiring loans must
provide any information necessary for the lender to comply with reporting
requirements to the agency?

(M)

21. Does the automated system compare lender/ servicer financial and
performance information against agency portfolio evaluation criteria to
identify lenders/ servicers for regular or special review? (M)

22. Does the automated system compute performance statistics for effective
monitoring, including delinquency rates, default rates, and claim rates?

(M)

23. Does the automated system compute a quantified risk for each lender/
servicer? The risk is quantified by weighting appropriate risk factors (e.
g., loan volume, delinquency rate, default rate) based on the correlation
between the risk factors and lender/ servicer performance. (M)

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24. Does the automated system compare the quantified lender/ servicer risk
to risk rating criteria to assign a risk rating to each lender/ servicer (e.
g., high, medium, low)? (M)

25. Does the automated system enter high- risk lenders/ servicers on a
problem watchlist and generate a notice to each affected lender/ servicer?
(V)

General requirements - lender/ servicer monitoring process –

support lender/ servicer reviews

26. Does the agency document the on- site review findings of lenders/
servicers to evaluate their performance against program standards and
requirements and submit them to agency review boards? (M)

27. Does the automated system provide historical performance information on
lenders and servicers identified for review to the review team? (M)

28. Does the automated system provide for scheduling and tracking of the
review team's activities? (V)

29. Does the automated system document review results including date of
review, name( s) of reviewer( s), and any deficiencies and associated
explanations? (V)

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30. Does the automated system record text comments relevant to the review
process? (V)

General requirements - lender/ servicer monitoring process –

assess corrective action

31. For minor noncompliances, do the agencies and lender/ servicer agree on
corrective actions?

(M)

32. Has the agency defined the decertification process and established
timetables by which decertified lenders may apply for reinstatement in
accordance with OMB Circular A- 129? (M)

33. Does the automated system update the status of lenders and servicers
that do not comply with agency standards for continued program participation
or do not correct deficiencies identified through reviews in a reasonable
period of time? (M)

34. Does the automated system provide data to support corrective action
plans such as penalties and/ or sanctions?

(M)

35. Does the automated system record penalties and/ or sanctions imposed by
the agency review board on those lenders or servicers found to be in serious
and frequent noncompliance with federal program standards? (M)

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Lender management Yes/ no na Explanation

36. Does the automated system generate a notice to inform the lender/
servicer of a finding of noncompliance (electronically, where appropriate),
including any penalties or sanctions and the right to appeal? (V)

37. Does the automated system document and track corrective action plans
agreed to by the agency and the lender/ servicer, including proposed
resolution dates, and update lender/ servicer data to reflect any changes in
status resulting from the corrective actions?

(V)

38. Does the automated system document and track appeals received from the
lender/ servicer and agency appeal decisions and generate a decision notice
to the lender/ servicer? (V)

Collateral requirements

(Note: There are no collateral requirements applicable to the lender
management function.)

Internal management information requirements

39. Are the internal management information requirements (lender eligibility
activity, completed reviews, lender performance, exceptions) available to
agency credit program managers and designated internal review officials on a
periodic or on an as requested basis? (M)

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Lender management Yes/ no na Explanation

40. Has the agency determined the specific management information needs
necessary to manage its credit programs based on the agency's mission and
its applicable statutory requirements? (M)

41. Does the system, in order to support the above needs, provide a user-
friendly query tool (preferably graphics- based) that facilitates reporting
rapidly on any required data elements?

(M)

42. Does the agency maintain financial accounting information at appropriate
levels of summary (transaction, loan history, risk category, cohort,
account) for computational and reporting purposes? (M)

43. Has the agency determined whether the information should be provided on
hard copy reports or through system queries? (M)

Internal management information requirements –

lender eligibility activity

44. Does the lender eligibility summary provide information about the number
of lender applications received, approved, and disapproved in a period? The
purpose of this data summary is to monitor the lender application activity
of the agency and the disposition of the lender applications. (M)

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Internal management information requirements –

completed reviews

45. Does the summary convey the results of the lender reviews completed
during the reporting period? (M)

46. Does the summary describe any recommended actions resulting from the
lender reviews? (M)

Internal management information requirements –

lender performance

47. Does the summary present the overall performance of each lender's
portfolio, including total losses across fiscal years? The purpose of this
data summary is to identify lenders with consistently high default rates or
other poor performance for agency review and evaluation. (M)

Internal management information requirements –

exceptions

48. Does the summary highlight deficiencies in the lender management
function? An example of exception data is a list of lenders who are not in
compliance with agency and statutory requirements and who have not been
penalized or decertified. (M)

49. Is the data summary generated periodically or on demand as needed? (M)

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na Explanation General requirements

1. Does the agency provide guidance to its lenders for determining a
borrower's creditworthiness? (M)

2. Does the agency train its personnel to evaluate the lender's analysis of
creditworthiness? (M)

General requirements –

guaranteed request evaluation process –

process request for loan guarantee

3. Does the automated system record critical data on the lender's guarantee
request to support the guarantee evaluation process? (M)

4. Does the automated system provide access to guarantee request information
to each individual participating in the guarantee decision? (M)

5. Does the automated system record text comments relevant to the guarantee
decision? (V)

General requirements –

guaranteed request evaluation process –

verify borrower program eligibility and creditworthiness

6. Does the automated system, where applicable, compare borrower information
on the lender's guarantee request to

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agency program borrower eligibility criteria? (M)

7. Does the automated system, where applicable, check the appropriate system
data files to determine whether a lender has recently submitted a duplicate
guarantee request for the applicant or a guarantee request for the applicant
has been previously denied? (M)

8. Does the automated system, where applicable, document whether the
applicant has previously defaulted on debt to the federal government? (M)

9. Does the automated system, where applicable, compare the applicant's
creditworthiness information to system- stored program creditworthiness
criteria and assign a credit risk rating to the applicant, unless
specifically excluded by program requirements? (M)

10. Does the automated system, where applicable, document that the lender
obtained a credit bureau report? (V)

11. Does the automated system, where applicable, document that the
borrower's financial data, repayment ability, and repayment history have
been verified? (V)

General requirements –

guaranteed request evaluation process –

conduct funds control

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12. Does the automated system provide the information needed to compute the
credit subsidy amount associated with a loan guarantee using projected cash
flows and the applicable Treasury interest rate in accordance with OMB
Circular A- 34, Instructions on Budget Execution; OMB Circular A- 11,
Preparation and Submission of Budget Estimates (updated

annually); and Statement of Federal Financial Accounting Standards (SFFAS)
No. 2, Accounting for Direct Loans and

Loan Guarantee. (M)

13. Does the automated system provide an automated interface with the core
financial system to determine if (1) sufficient funds are available in the
program account and, if available, (2) lending limits in the financing
account are sufficient to cover the subsidy cost and the face value of the
proposed guarantee? (M)

General requirements –

guaranteed request evaluation process –

approve/ reject guarantee request

14. Does the automated system reflect the approved guarantee status? (M)

15. Does the automated system accept, identify, track, and report supervisor
overrides of system- generated acceptance/ rejection recommendations? (M)

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na Explanation

16. Does the automated system create and maintain a system record of
rejected guarantee requests? (M)

17. Does the automated system notify the lender of approval or disapproval
(electronically where appropriate)? (V)

General requirements –

guaranteed origination process –

issue loan guarantee

18. Does the automated system record the cohort and risk category, as
defined in OMB Circular A- 34, Instructions on Budget Execution, associated

with the guaranteed loan? (M)

19. Does the automated system assign a unique account number to the
guaranteed loan that remains unchanged throughout the life of the guarantee?
(M)

20. Does the automated system generate a guarantee endorsement to confirm
that the loan is guaranteed and transmit it to the lender (electronically
where possible)? (M)

21. Does the automated system calculate and record the guarantee origination
fee in accordance with the terms and conditions of the guarantee agreement?
(M)

22. Does the automated system record collections of origination fees
received? (M)

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na Explanation

23. Does the automated system provide an automated interface with the core
financial system to record the guaranteed loan commitment, the obligation
for the related subsidy, and the origination fee, receivable, and
collection? (M)

24. Does the automated system transmit the origination fee invoice to the
lender? (V)

General requirements –

guaranteed origination process –

document lender loan disbursement

25. Does the automated system provide an automated interface with the core
financial system to record the outlay of subsidy from the program account?

(M)

26. Does the automated system record information on loan disbursements by
the lender, including amounts and applicable Treasury interest rates, to
support interest computations and subsidy reestimates, unless specifically
excluded by program requirements? (M)

27. Does the automated system provide the capability to receive electronic
transmission of disbursement data by the lender? (V)

28. Does the automated system provide the capability for

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reporting loan closing information? (V)

General requirements –

guaranteed loan maintenance process –

document loan modifications

29. Does the automated system support reevaluation of the modified loans in
accordance with OMB Circular A- 34 and program policy? (M)

30. Does the automated system reflect the modified status of the guaranteed
loan? (M)

31. Does the automated system establish a new loan account and collateral
record for each new debt instrument? (M)

32. Does the automated system assign a unique loan account number to the new
account record? (M)

33. Does the automated system maintain a link between the new loan account
established for the new debt instrument and the old loan account records?
(M)

34. Does the automated system perform a funds control check to verify the
availability of subsidy through an automated interface with the core
financial system? (M)

35. Does the automated system provide an automated interface with the core
financial system to record the subsidy changes

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na Explanation

associated with the guaranteed loan modification? (M)

General requirements –

guaranteed loan maintenance process –

process fees

36. Does the automated system compare guaranteed loan data to guaranteed fee
criteria to determine which lenders owe guarantee fees? (M)

37. Does the automated system compute the amount of the guarantee fee? (M)

38. Does the automated system identify those lenders with overdue fee
payments and calculate penalties on loans for lenders who have not submitted
guarantee fee payments? (M)

39. Does the automated system generate invoices, including penalties
assessed for late payment, for guarantee fee payments due from lenders
(electronically where possible)?

(M)

40. Does the automated system provide an automated interface with the core
financial system to record the receipt of guarantee fees from lenders?

(M) General requirements –

guaranteed loan maintenance process –

record interest supplement payments

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Guaranteed Loan System Requirements

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na Explanation

41. Does the automated system identify guaranteed loans requiring interest
supplement payments? (M)

42. Does the automated system compare current interest rates to the interest
rates in the agreement to determine the appropriate levels of interest
supplements required? (M)

43. Does the automated system recognize the interest supplement payment as
an interest subsidy expense and a loan guarantee interest supplement
liability? (M)

44. Does the automated system provide an automated interface with the core
financial system to initiate and record disbursements for interest
supplement payments? (M)

45. If the guaranteed loan system handles the payment processing, does it
meet the requirements in the Core Financial System Requirements related to
payments and send

summary data to the core financial system? (M)

Collateral requirements

46. Does the automated system capture the estimated useful economic life of
the pledged collateral and compare it to the proposed term of the loan? (V)

47. Does the automated system document that transactions over a
predetermined amount

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identified by program requirements have a collateral appraisal by a licensed
or certified appraiser? (V)

48. Does the automated system compute the loan- to- value ratio and flag
those loans with a ratio exceeding applicable program requirements? (V)

Internal management information requirements

49. Are the internal management information requirements (approval and
rejection monitoring, override expectations, potential application fraud,
approval/ rejection statistics, detailed transaction history, median loan-
to- value ratio, loan guarantee fee collection, loan guarantee periodic fee
collection, and exceptions) available to agency credit program managers and
designated internal review officials on a periodic or on an as requested
basis? (M)

50. Has the agency determined the specific management information needs
necessary to manage its credit programs based on the agency's mission and
its applicable statutory requirements? (M)

51. Does the system, in order to support the above needs, provide a user-
friendly query tool (preferably graphics- based)

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that facilitates reporting rapidly on any required data elements?

(M)

52. Does the agency maintain financial accounting information at appropriate
levels of summary (transaction, loan history, risk category, cohort,
account) for computational and reporting purposes? (M)

53. Has the agency determined whether the information should be provided on
hard copy reports or through system queries? (M)

Internal management information requirements –

approval and rejection monitoring

54. Does the approval and rejection monitoring summary provide information
about all credit applications that were approved or rejected for a given
time period? (M)

55. Are the data broken down into separate statistics on credit approvals
and rejections? (M)

56. Does the approval section indicate the number of approved applications
and the percentage of total applications that they represent? (M)

57. Are the total requested amount and the total approved amount shown for
each loan origination office? (M)

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na Explanation

58. Does the rejected application section contain the number of rejected
applicants and the percentage of total applications they represent? (M)

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

60. Does the summary also list the average time spent to process a credit
application, from the time of application until the final decision is made?
(M)

Internal management information requirements –

override expectations

61. Does the override expectations summary identify all credit application
decisions that override the action recommended by the automated system
processes? Overrides can occur in two situations: an application is approved
even though the borrower's program eligibility or creditworthiness
assessment is not acceptable under agency program management criteria, or an
application is rejected even though the applicant's program eligibility and
creditworthiness are acceptable under agency program management criteria.

(M) Internal management information requirements –

potential application fraud

62. Does the potential application fraud summary provide all applications
that matched one

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or more pending or recently rejected applications? Comparison is based on
four criteria: applicant name, applicant address, applicant phone number,
and applicant taxpayer identification number (TIN). If a pending application
matches any of these criteria, the data fields that matched and the original
application and pending application identification numbers will appear on
this data summary with primary application identification information. (M)

Internal management information requirements –

approval/ rejection statistics

63. Does the approval/ rejection statistics summary contain statistics on
guarantee approvals and rejections? (M)

64. Is the data summary broken down into separate statistics on guarantee
approvals and rejections? (M)

65. Does the approval section indicate the number of approved applications
and the percentage of total applications that they represent? (M)

66. Are the total requested amount and total approved amount shown for each
guarantee origination office? (M)

67. Does the rejected application section contain the number of rejected
applicants and the

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percentage of total applications that they represent? (M)

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

Internal management information requirements –

detailed transaction history

69. Does the detailed transaction history summary contain detailed loan
guarantee and account data? The data summary is used for control and
tracking and also as an audit trail. (M)

70. Is the information presented by program for both the current and prior
reporting period?

(M) Internal management information requirements –

median loan- to- value ratio

71. Is the median loan- to- value ratio summary used to track the median
loan- to- value ratios for guarantees written by each regional office? The
median loan- to- value ratio is the midpoint in the range of portfolio loan-
to- value ratios. (M)

Internal management information requirements –

loan guarantee fee collection

72. Is the loan guarantee fee collection summary used to monitor guarantee
origination fee collections? (M)

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Guaranteed Loan System Requirements

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na Explanation Internal management information requirements –

loan guarantee periodic fee collection

73. Is the loan guarantee periodic fee collection summary used to monitor
the periodic loan guarantee fee collection activity? (M)

Internal management information requirements –

exceptions

74. Does the exceptions summary highlight deficiencies in guarantee
origination processing? (M)

75. Is the exceptions summary (e. g., a list of approved requests that have
not been processed in a specified period of time) generated periodically or
on demand as needed? (M)

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General requirements –

portfolio performance process –

process guaranteed loan status reports from lender

1. Does the automated system receive and document loan guarantee information
from lenders (electronically where appropriate)? (M)

2. Does the automated system maintain standard information on the history
and status of each guaranteed loan (e. g., borrower identification, amount
and nature of debt, loan originator, holder, and/ or servicer)? (M)

3. Does the automated system maintain data from the lender that identifies
delinquent accounts and potential defaults?

(M)

4. Does the automated system provide agency access to the loan status
information? (M)

5. Does the automated system receive and record lender substitution and/ or
transfer data, i. e., secondary market sales (electronically where
possible)? (M)

6. Does the automated system accept lender data by cohort and risk category?
(M)

General requirements –

portfolio performance process –

compute portfolio performance measures

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Guaranteed Loan System Requirements

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7. Does the system's performance measurement highlight program trends to
prompt reexamination of agency policies as conditions warrant? (M)

8. Is the value of a given performance measure examined within the context
of the total cost to the agency using the measure? (M)

9. Does the automated system compute and maintain program performance
information (e. g., number and dollar value of loans made, average loan
size, loans made by geographical region, number and amount of defaulted
loans, number and amount of claims paid, amount of loan write- offs)? (M)

10. Does the automated system compute and maintain financial measures to
help assess the credit soundness of a loan program (e. g., overall portfolio
risk rate, average loan- to- value ratio (for collateralized programs),
write- offs as a percentage of seriously delinquent acquired loans, net
proceeds on real property sold compared to appraised value, loan loss rates,
recovery rates, loan currency rates)? (M)

11. Does the automated system maintain portfolio data needed to help
determine the effectiveness of use of agency resources (e. g.,
administrative cost per loan guarantee approved, administrative cost per
acquired loan serviced,

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administrative cost per dollar collected, time required to process a loan
guarantee application)? (M)

12. Does the agency reestimate subsidy costs upwards or downwards to reflect
differences in interest rates, technical assumptions, and expected changes
in current and future conditions that have occurred between the time of
budget formulation and loan disbursement? (M)

13. Does the agency use the funds management function of the core financial
system to record the appropriations, apportionments, and limitations
associated with the program account and financing account for each credit
program? (M)

14. Does the system access the core financial system to perform funds
control validation? Accounting for and controlling administrative expenses
related to credit programs can be accomplished in the core financial system,
so this activity would not normally be included in the guaranteed loan
system.

(M) General requirements –

program financing process –

support Treasury borrowing calculations

15. Are subsidy amounts estimated so as to cover the costs of any payments
of guarantee claims for defaulted loans? (M)

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Guaranteed Loan System Requirements

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16. Does the automated system execute SF- 1151s and record amounts borrowed
from Treasury to cover temporary shortfalls in the subsidy estimates? (M)

17. Does the automated system track the amount of uninvested funds in the
financing account as needed to support interest earnings calculations? (M)

18. Does the automated system compute interest expense on borrowings and
interest earnings on univested funds?

(M)

19. Does the automated system execute and record repayment of principal
using SF- 1151s and interest to Treasury using SF1081s?

(M)

20. Does the automated system execute and record receipt of interest
earnings from Treasury on univested funds using SF- 1081s? (M)

General requirements –

program financing process –

support subsidy reestimates

21. Does the reestimate of each cohort cash flow include claims paid and
fees collected, defaults, delinquencies, recoveries, etc.? (M)

22. Does the reestimate of each cohort cash flow include prepayments and
collections of principal, interest, and fees

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when the agency acquires the guaranteed loan? (M)

23. Does the automated system support the reestimate of the subsidy cost for
each cohort and risk category of loans at the beginning of each fiscal year
in accordance with OMB Circular A- 34 and SFFAS No. 2? (M)

24. Does the automated system maintain cash flow data that permits
comparison of actual cash flows each year (and new estimates of future cash
flows), as well as historical data from prior years to the cash flows used
in computing the latest loan subsidy estimate? (M)

25. Does the automated system compare the current year reestimated subsidy
cost to prior years reestimated loan subsidy costs to determine whether
subsidy costs for a risk category increased or decreased? (M)

26. Does the automated system transfer loan subsidy from those risk
categories with an excess of loan subsidy to those risk categories in the
same cohort that are deficient in loan subsidy to provide adequate funding
for each risk category?

(M)

27. Does the automated system group those cohorts that need indefinite
appropriation loan subsidy funds separately from those cohorts that have
excess funds? (M)

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28. Does the automated system support the request for an apportionment and
obligate funds to cover the subsidy increase for those cohorts of loans that
have insufficient subsidy? (M)

29. Does the automated system transfer excess subsidy of cohorts of loans to
the specialfund receipt account? (M)

30. Does the system support the reestimate calculation and provide the
necessary data to record the reestimate in the core financial system? (M)

General requirements –

support subsidy estimate –

loan characteristics

31. Does the loan system maintain data that are predictive of loan
performance and subsidy costs? Loan characteristics maintained in a loan
system will vary greatly from program to program. (M)

32. Is the information obtained from either the loan system, the core
financial system, or other data repository within or outside the agency? (M)

33. Does the agency collect at least the following loan characteristics:

Loan number? Cash flows should be maintained at the individual loan level,
even though analysis might often be done at the cohort level.

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Cash flows, such as receipts from property disposition, must be tracked back
to the original loan via the loan number or other data element used to
identify the original loan. Date of obligation? This information is
necessary for reviewing historical cohort data, since cohorts are defined by
year of obligation, and for relating loan behavior to other dated variables.
Loan terms and conditions? A system should maintain the actual loan terms,
including maturity, interest rate, and up- front and/ or annual fees. These
data are critical for comparing actual payments to scheduled payments and
for measuring the relationship between default risk and loan terms and
conditions. The system should be able to calculate and report, as necessary,
the aggregate repayment schedule for a cohort. Changes in loan terms and
conditions? Any change in terms and conditions needs to be recorded in
addition to the original terms and conditions, not in place of them. These
data are needed both to reestimate the subsidy cost and to establish a basis
for estimating new subsidies. Borrower location? Agencies may choose to
collect several location elements, such as zip code,

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congressional district code, approving office code, and servicing office
code for regional analysis. Borrower creditworthiness? Since
creditworthiness may be a strong predictor of defaults, the loan system
should include measures of the financial condition of the business or
individual receiving the loan and past credit experience, unless
specifically excluded by program requirements. Loan use? Tracking the
intended loan use may reveal a significant variance in cost depending on the
use of loan proceeds. Program- specific data? Other loan characteristics may
also be important in predicting default. The loanto- value ratio is a
critical data element for predicting housing loan defaults; for student
loans, the type of educational institution may be important; the value of
collateral is required unless specifically excluded by program requirements.
(M)

General requirements –

support subsidy estimate –

economic data

34. Does the system maintain the primary economic factors that influence
loan performance? The critical indictors will vary across programs. For
housing loans, among other factors, property values and house appreciation
rates should be

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monitored. For programs that determine a borrower's interest rates based on
the borrower's income, all economic data on incomes should be maintained in
either the guaranteed loan system, the core financial system, or another
data repository within or outside the agency. (M)

General requirements –

support subsidy estimate –

historical cash flows

35. Are all cash transactions related to each loan maintained in the system
to allow for trend analysis? (M)

36. Has the agency considered grouping transactions by the type of cash
flows that are projected in loan program subsidy estimates since
transactions may be identified by a wide variety of transactional codes?
These groupings will vary from program to program, depending on the way cash
flows are projected for subsidy estimates. Examples of information
groupings, which may be modified to fit actual loan programs, include:

Guaranteed amount. Disbursement amount and disbursement rate for each year.
Up- front fee. Annual fees. Interest subsidies. Claims paid and guarantees
terminated.

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Defaulted loan data including both the timing and amount. Delinquencies.
Recoveries (including both the timing and amount) on defaulted loans by
recovery method such as sale of collateral or offset programs. Loan- to-
value ratios. Scheduled principal and interest payments (if the agency
acquires and services the loan). Actual principal and interest payments (if
the agency acquires and services the loan). Prepayment including timing and
amount. Repayment activity. (M)

37. Does the agency obtain the above information from either the guaranteed
loan system, the core financial system, or other data repository (such as
microfiche or CD- ROM that permits easy retrieval of data) within or outside
the agency?

(M) Collateral requirements

(Note: There are no collateral requirements applicable to the portfolio
management function.)

Internal Management Information Requirements

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

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portfolio, and program credit reform status) available to agency credit
program managers and designated internal review officials on a periodic or
on an as requested basis? (M)

39. Has the agency determined the specific management information needs
necessary to manage its credit programs based on the agency's mission and
applicable statutory requirements? (M)

40. Does the agency maintain financial accounting information at appropriate
levels of summary for computational and reporting purposes (transaction,
loan history, risk category, cohort, and account)? (M)

41. Has the agency determined whether the information should be provided on
hard copy reports or through system queries? (M)

42. Does the system provide at least the following types of management
information:

Detailed transaction history? Profile of guaranteed loan portfolio? Program
credit reform status? (M)

Internal management information requirements –

detailed transaction history

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43. Does the detailed transaction history summary identify, for each cohort,
the number and amount of loan guarantees in each phase of the guaranteed
loan life cycle? (M)

44. Does the information provided include the number of loans current and
delinquent, the number of loans for which a claim has been submitted, and
the total number and value of loans in the portfolio? (M)

Internal management information requirements –

profile of guaranteed loan portfolio

45. Does the profile of guaranteed loan portfolio summary provide a year-
to- date profile of each guaranteed loan program, with comparisons to the
prior year's loan guarantee activity? (M)

Internal management information requirements –

program credit reform status

46. Does the program credit reform status summary provide the status of the
fiscal year's credit reform appropriations and subsidy levels? (M)

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General requirements

1. Has the agency ensured that the lender has taken all appropriate steps to
collect a debt including foreclosure and liquidation of any collateral? (M)

General requirements –

claim processing process –

evaluate claim application

2. If the lender has foreclosed and liquidated any collateral and still has
a balance due, does the agency pay the claim and attempt to collect the
deficient amount based on statutory requirements and agency policy? (M)

3. Does the automated system record key claim data, maintain data on
original and, if applicable, final claims? (M)

4. Does the automated system compare the claim application information to
the agency program claim application evaluation criteria? (M)

5. Does the automated system suspend processing for claims that are
incomplete until corrected? (M)

6. Does the automated system identify claims not meeting agency program
requirements and notify the lender of the rejection? (M)

7. Does the automated system document and track information

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on accepted and rejected claims and the reason for the rejections? (M)

8. Does the automated system reflect the status of the claim?

(M)

9. Does the automated system have edits to address claims issues? (M)

10. Does the automated system record or track claims errors?

(M) General requirements –

claim processing process –

process authorized claim for payment

11. Does this activity support underlying details for the payment of an
approved guaranteed loan claim to the lender? (M)

12. Does the automated system calculate the claim payment to be made, making
adjustments for any disallowed amounts or authorized debt collection
activities? (M)

13. Does the automated system provide an automated interface with the core
financial system to initiate a disbursement of the claim payment to the
lender?

(M)

14. If the system processes payments, does it meet the requirements in the
Core Financial System Requirements

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related to payment data in the core financial system? (M)

15. Does the automated system record acquired loan information and establish
appropriate accounting entries, such as a receivable? (M)

16. Does the agency ensure that invoices are generated promptly and that
efficient mechanisms are in place to collect and record payments and to
provide support for loan servicing? (M)

17. Are borrowers encouraged to use preauthorized debit or credit cards when
making loan payments? (M)

General requirements –

account status maintenance process –

evaluate delinquent debtors for collection or write- off

18. Does the automated system identify accounts for which collection is to
be pursued?

(M)

19. Does the automated system identify accounts that should be written- off?
(M)

General requirements –

account status maintenance process –

invoice debtor

20. Does the automated system calculate outstanding balances for each loan
account invoiced, including principal, interest, late

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charges, and other amounts due? (M)

21. Does the automated system identify loan accounts to be invoiced based on
agency program invoicing criteria and loan account information? (M)

22. Does the automated system generate and transmit an invoice to each
borrower? (M)

23. Does the invoice include, at a minimum, borrower ID, amount due, date
due, the date after which the payment will be considered late, and the
current balance? (M)

24. Does the automated system provide for automatic acceleration of
delinquent installment payment notes based on the acceleration clause? (M)

25. Does the automated system track and age receivables by type? (M)

26. Does the automated system provide an automated interface with the core
financial system to record accrual of interest, administrative charges, and
penalties for delinquent loan accounts? (M)

General requirements –

account status maintenance process –

apply collections

27. Does the automated system apply collections according to

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agency program receipt application rules to the appropriate liquidating or
financing account? (M)

28. Does the automated system record a partial, full, or late payment
indicator? (M)

29. Does the automated system identify payments that cannot be applied? (M)

30. Does the automated system document the reasons why the payments cannot
be applied?

(M)

31. Does the automated system provide an automated interface with the core
financial system to record the collection? (M)

32. If the system processes collections, does it meet the requirements in
the Core Financial System Requirements

related to collections? (M)

33. If the system processes collections, does it send summary data to the
core financial system? (M)

Foreclose and liquidate collateral requirements –

foreclose on collateral process- prepare foreclosure materials

34. Does the automated system provide information on collateral for use in
the foreclosure process? (M)

35. Does the automated system update the acquired loan

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information store with additional information obtained during the
foreclosure preparation process, such as recent appraisal values and
property condition? (M)

36. Does the automated system calculate outstanding principal, interest, and
penalties for each loan with collateral to be foreclosed? (M)

Foreclose and liquidate collateral requirements –

foreclose on collateral process- foreclose

37. Does the automated system provide information to generate a foreclosure
notice to the borrower? (M)

38. Does the automated system transmit information necessary for the
foreclosure to the Department of Justice and/ or agency Office of General
Counsel? (M)

39. Does the automated system record the results of the foreclosure
proceedings and title conveyance to the agency?

(M)

40. Does the automated system provide an automated interface of data on
acquired collateral to the property management system for management and
liquidation of the property?

(M)

41. Does the automated system provide an automated interface

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to the core financial system to record the value of the property acquired
and to reduce the receivable amount? (M)

Foreclose and liquidate collateral requirements –

manage/ dispose of collateral process –

manage collateral

42. Does the automated system generate payments to property management
contractors for services rendered? (M)

43. Does the automated system track, record, and classify operations and
maintenance expenses related to the acquired collateral? (M)

44. Does the automated system document rental income and other collections
related to the acquired collateral? (M)

45. Does the automated system post the expenses and income to the core
financial system through an automated interface? (M)

Foreclose and liquidate collateral requirements –

manage/ dispose of collateral process –

dispose of collateral

46. Does the automated system update the acquired loan information store to
record receipts resulting from the liquidation of acquired collateral and
the disposition of the collateral? (M)

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47. Does the automated system identify any deficiency balances remaining for
the loan after collateral liquidation for further collection activities? (M)

48. Does the automated system provide an automated interface to the core
financial system and the property management system to record disposal of
the property and associated receipts? (M)

Internal management information requirements

49. Are the following minimum internal management information requirements
available to agency credit program managers and designated internal review
officials on a periodic or on an as requested basis:

Guaranteed loan claim activity? Summary data of claim losses paid out?
Detailed transaction history? Standard management control/ activity?
Exceptions? Portfolio sale historical payments? Portfolio sale performance?
Collateral management activity and expense? (M)

50. Has the agency determined the specific management information necessary
to manage its credit programs

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based on the agency's mission and applicable statutory requirements? (M)

51. Does the agency maintain financial accounting information at appropriate
levels of summary (transaction, loan history, risk category, cohort, and
account) for computational and reporting purposes? (M)

52. Has the agency determined whether the information should be provided on
hard copy reports or through system queries? (M)

Internal management information requirements –

guaranteed loan claim activity

53. Is the summary used to monitor trends in claim activity over time? (M)

54. Is the information presented at the cohort level for the current year
and prior years? (M)

Internal management information requirements –

summary data of claim losses paid out

55. Is the summary used to compare the estimated claim losses of guaranteed
loan programs to the actual losses incurred by the program? (M)

Internal management information requirements –

detailed transaction history

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56. Does the summary provide detailed loan account data and payment
transaction activity to give a detailed history of applied and unapplied
payments? (M)

Internal management information requirements –

standard management control/ activity

57. Does the summary track the status of all loan accounts by summarizing
loan activity at various critical points of the loan cycle? (M)

58. Does the collection process summarize payment activity to allow agency
management to monitor the effectiveness of each activity in the collection
process? (M)

59. Is the delinquency information summarized to highlight delinquent debt
(collateralized and noncollateralized) and modified debt? (M)

60. Is this data summary produced periodically? (M)

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

Internal management information requirements –

exceptions

62. Does the summary identify deficiencies that have occurred in the routine
processing and monitoring of account status? Examples of exceptions include

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unapplied payments and delinquent accounts not eligible for debt collection
tools. (M)

63. Is the summary generally produced periodically? (M)

Internal management information requirements –

portfolio sale historical payments

64. Does the summary provide a detailed payment history for each loan
included in the portfolio selected for sale? Historical payment data is
critical in order to assess the investment value of the portfolio to be
offered for sale and in determining the structure and terms of the sale. (M)

Internal management information requirements –

portfolio sale performance

65. Does the summary provide the rating agencies and financial advisors with
statistics to more effectively evaluate portfolio characteristics
performance? Statistics include loan- to- value ratios, effective yields,
and loss estimates. (M)

Internal management information requirements –

collateral management activity and expense

66. Does the summary provide detailed and summary data of collateral
management activity and expense data for monitoring collateral management
activities

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that affect the value of the agency- owned property prior to disposition?
(M)

67. Is all income earned and are expenses incurred while the collateral is
in the agency's possession are these recorded and tracked to support the
agency's ability to recover the expenses? (M)

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1. Does the agency that repurchases and services its guaranteed loans or is
assigned collection rights when loss claims are paid comply with the Debt
collection Improvement Act of 1996? (M)

2. Has the agency established a collection strategy consistent with its
statutory program authority that seeks to return the debtor to a current
payment status or, failing that, maximize the collections that can be
realized? (M)

General requirements –

collection actions process –

report delinquent debt

3. Does the automated system identify delinquent commercial and consumer
accounts for reporting to credit bureaus (preferably by electronic
interface) by comparing reporting criteria to delinquent loan data? (M)

4. Does the automated system calculate outstanding balances, including
interest, penalties, and administrative charges, and include this
information in credit bureau records? (M)

5. Does the automated system generate (or include in demand letters) a
notice to inform the borrower of the referral of a delinquent debt to a
credit bureau in accordance with regulations? (M)

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6. Does the automated system maintain a record of each account reported to
credit bureaus to allow tracking of referred accounts? (V)

7. Does the automated system identify delinquent commercial and consumer
accounts for reporting to CAIVRS by comparing reporting criteria to
delinquent loan data? (V)

8. Does the automated system generate (or include in demand letters) a
notice to inform the borrower of the referral of a delinquent debt to CAIVRS
in accordance with regulations?

(V)

9. Does the automated system prepare data on appropriate medium, on a
monthly basis, of delinquent debtors to be included in the CAIVRS database?
(V)

General requirements –

collection actions process –

contact with the debtor

10. Does the automated system generate and transmit dunning letters to
debtors with past- due loan accounts? (M)

11. Does the automated system identify debtors who do not respond to dunning
letters within a specified time period?

(M)

12. Does the automated system track demand letters and borrower responses to

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document borrower due process notification (and borrower willingness and
ability to repay debt)? (M)

13. Does the automated system track and document debtor appeals received in
response to demands for payment? (M)

14. Does the system provide automated support to the collection process? (M)

15. If so, is support provided for activities such as contacting a
delinquent borrower by phone; documenting contacts with a debtor and the
results; documenting installment payments, rescheduling agreements, and debt
compromise; generating management reports; and tracking the performance of
individual agency collectors?

(M) General requirements –

collection actions process –

refer for Treasury offset

16. Does the automated system identify accounts eligible for referral to the
Treasury offset program (TOP)? (M)

17. Does the automated system generate written notification to the borrower
that includes the following:

The nature and the amount of the debt? The intention of the agency to
collect the debt through

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administrative offset? An explanation of the rights of the debtor? An offer
to provide the debtor an opportunity to inspect and copy the records of the
agency with respect to the debt? An offer to enter into a written repayment
agreement with the agency?

(M)

18. Does the automated system identify, at the end of the notification
period, the debtors who remain delinquent and are eligible for referral? (M)

19. Does the automated system offset delinquent debts internally before
referral to TOP, where applicable? (M)

20. Does the automated system transmit to TOP eligible new debts, and
increase, decrease, or delete previously reported debts? (M)

21. Does the automated system apply collections received through the TOP
process to debtor accounts in accordance with applicable payment application
rules? (M)

22. Does the automated system record offset fees in accordance with agency
program requirements? (M)

23. Does the automated system update the loan information store to reflect
TOP status?

(M)

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24. Does the automated system update the core financial system to record
collections from TOP?

(M)

25. Does the automated system process agency refunds given to borrowers
erroneously and offset and transmit this information to Treasury on time?
(M)

26. Does the automated system record refunds given by Treasury and adjust
the loan information store accordingly?

(M) General requirements –

collection actions process –

garnishment of nonfederal wages

27. Does the agency give the debtor at least 30- days written notice of its
intent to initiate garnishment proceedings? (M)

28. Does the automated system generate a written notice informing the
borrower of the agency's intention to initiate proceedings to collect the
debt through deductions from pay, the nature and amount of the debt to be
collected, and debtors' rights? (M)

29. Does the automated system document that the wage garnishment order was
sent to the employer? (M)

30. Does the automated system provide an ad hoc reporting capability needed
to monitor the

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amounts recovered through nonfederal wage garnishment?

(M)

31. Does the automated system document that the agency provided debtors with
a hearing, when requested? (M)

32. Does the automated system interface with the core financial system to
record receipts remitted to the agency? (M)

33. Does the automated system apply collections received through wage
garnishment according to agency application rules? (M)

General requirements –

collection actions process –

refer to collection agencies

34. Does the automated system compare delinquent account data to agency
program collection and agency referral criteria to select delinquent loan
accounts for referral to collection agencies? (M)

35. Does the automated system sort and group delinquent loan accounts based
on type of debt (consumer or commercial), age of debt, and location of
debtor?

(M)

36. Does the automated system calculate outstanding interest, penalties, and
administrative charges for each delinquent loan account to be referred? (M)

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37. Does the automated system assign selected delinquent loan account
groupings to appropriate collection agencies based on collection agency
selection criteria for agency programs? (M)

38. Does the automated system document that the delinquent account has been
referred to a collection agency? (M)

39. Does the automated system generate and receive electronic transmissions
of account balance data and status updates to and from collection agencies?

(M)

40. Does the automated system record receipts remitted to the collection
agency and forwarded to the agency? (M)

41. Does the automated system update the loan information store to reflect
receipts, adjustments, and other status changes, including rescheduling,
compromise, and other resolution decisions? (M)

42. Does the automated system accept and match collection agency invoices
with agency records? (M)

43. Does the automated system generate payment to the collection agency for
services rendered through the core financial system? (M)

44. Does the automated system request, reconcile, and record

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returned accounts from collection agencies? (M)

45. Does the automated system interface with the core financial system to
record collections processed through collection agencies? (M)

General requirements –

collection actions process –

refer for litigation activities

46. Are referrals to the Department of Justice (DOJ) made in accordance with
the Federal Claims Collections Standards?

(M)

47. Does the automated system compare delinquent loan account information
against the agency's litigation referral criteria to identify delinquent
loan accounts eligible for referral? (M)

48. Does the automated system support identification of accounts to be
referred to counsel for filing of proof of claim based on documentation that
a debtor has declared bankruptcy? (M)

49. Does the automated system provide an electronic interface with credit
bureaus to obtain credit bureau reports that will enable assessment of the
debtor's ability to repay before a claim is referred to legal counsel? (M)

50. Does the automated system calculate the outstanding

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balance, including principal, interest penalties, and administrative
charges, for each delinquent loan account to be referred to legal counsel?
(M)

51. Does the automated system generate the claims collection litigation
report (CCLR)? (M)

52. Does the CCLR capture collection actions and current debtor information
and transmit this information to DOJ? (M)

53. Does the automated system send and receive electronic transmissions of
account data and status updates to and from DOJ's Central Intake Facility or
the agency's Office of General Counsel's (OGC) automated system for
referrals? (M)

54. Does the automated system update loan status to reflect referral for
litigation so that the loan can be excluded from other collection actions
and to alert the agency to obtain approval from counsel before accepting
voluntary debtor payment? (M)

55. Does the automated system track filing of pleadings and other motions,
including proofs of claims in bankruptcy, to ensure swift legal action and
to monitor litigation activity? (M)

56. Does the automated system match agency litigation referrals with the DOJ
list of agency litigation referrals? (M)

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Delinquent debt collection/ troubled debt servicing Yes/ no

na Explanation

57. Does the automated system record and track recovery of judgment
decisions? (M)

58. Does the automated system update the loan information store to reflect
receipts and adjustments? (M)

59. Does the automated system interface with the core financial system to
record any collections resulting from litigation? (M)

General requirements –

write- off and close- outs process –

identify and document accounts selected for write- off

60. Does the automated system compare delinquent loan account information to
agency program write- off criteria to select delinquent loan accounts for
possible write- off? (M)

61. Does the automated system classify debtors based on financial profile
and ability to repay? Indicators of the financial well- being of a debtor
include debtor financial statements, credit bureau reports, and payment
receipt history. (M)

62. Does the automated system produce a CCLR for each loan account to be
referred to agency counsel or DOJ for approval of termination of collection
action? (M)

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Delinquent debt collection/ troubled debt servicing Yes/ no

na Explanation

63. Does the automated system update the loan status to reflect the
referral? (M)

64. Does the automated system update the loan information store to reflect
approval or disapproval by agency counsel or the DOJ for termination of the
collection action? (M)

65. Does the automated system update the loan information store and provide
an automated interface with the core financial system to record the write-
off of the receivable? (M)

General requirements –

write- off and close- outs process –

monitor written- off accounts

66. Does the automated system maintain a suspense file of inactive (written-
off) loan accounts? (M)

67. Does the automated system reactivate written- off loan accounts at a
system user's request if the debtor's financial status or the account status
changes? (M)

General requirements –

write- off and close- outs process –

document close- out of uncollectible accounts

68. Does the automated system compare loan account data to agency close- out
criteria to identify debtor accounts eligible

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na Explanation

for close- out and 1099- C reporting? (M)

69. Does the automated system prepare and send a Form 1099- C to the
Internal Revenue Service (IRS) if the debtor has not responded within the
required time period? (M)

70. Does the automated system update the loan information store to reflect
receipts, adjustments, and other status changes, including rescheduling,
compromise, and other resolution decisions? (M)

71. Does the automated system retain electronic summary records of close-
out account activity for 5 years for use in agency screening of new loan
applications? (M)

Collateral requirements

(Note: There are no collateral requirements applicable to the portfolio
management function.)

Internal management information requirements

72. Are the internal management information requirements (detailed
transaction history, standard management control/ activity, exceptions,
trend analysis/ performance, collection contractor compensation) available
to agency credit program managers and designated internal review officials
on a

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na Explanation

periodic or on an as requested basis? (M)

73. Has the agency determined the specific management information needs
necessary to manage its credit programs based on the agency mission and
applicable statutory requirements? (M)

74. Is the agency maintaining financial accounting information at
appropriate levels of summary (transaction, loan history, risk category,
cohort, and account) for computational and reporting purposes? (M)

75. Has the agency determined whether the information should be provided on
hard copy reports or through system queries? (M)

Internal management information requirements –

detailed transaction history

76. Does the detailed transaction history summary provide detailed account
information by cohort for internal control and tracking, and, in the absence
of an electronic interface to external entities, can the history be used to
transfer data from the agency to the external entity to facilitate
delinquent debt collection actions? (M)

77. Are separate data summaries produced for offset referrals, collection
agency referrals,

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na Explanation

litigation referrals, and writeoffs and close- outs? (M)

Internal management information requirements –

standard management control/ activity

78. Does the standard management control/ activity summary track the status
of all referral activity including initial referrals, status updates, and
account balance updates? (M)

79. Are separate and summary lists produced for individual and total
reporting and referral activity? (M)

Internal management information requirements –

exceptions

80. Does the exceptions summary highlight deficiencies that have occurred in
the referral process? Examples of subjects for periodic exception
information include delinquent accounts eligible for reporting that have not
been reported, defaulted rescheduled loans, account referrals that can not
be processed, collection agency resolution percentage, accounts without
foreclosure or collateral management activity for a specified period of
time, accounts referred for litigation for which no litigation decision has
been recorded, and delinquent accounts without activity for long periods of
time that have not been written- off.

(M)

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Delinquent debt collection/ troubled debt servicing Yes/ no

na Explanation Internal management information requirements –

trend analysis/ performance

81. Does the trend analysis/ performance summary highlight the effectiveness
of different delinquent debt collection techniques over time? (M)

82. Does the summary indicate the effectiveness of using different types of
collection actions for different credit programs? (M)

Internal management information requirements –

collection contractor compensation

83. Does the collection contractor compensation summary provide monthly
account analyses to calculate, track, and verify compensation for each
contractor providing collection services to an agency? This information aids
in the verification of invoices received from the contractor and highlights
the differences in fee schedules among contractors.

(M)

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Treasury cross- servicing Yes/ no na Explanation

1. Has the agency entered into a letter of agreement with Treasury Financial
Management Service (FMS) authorizing FMS to provide debt collection services
before referring debt to a debt collection center? (M)

2. Does the agreement detail the limitations and parameters required for the
compromise, settlement, or termination of collection action? (M)

3. If applicable, has the agency submitted a proposal to Treasury that
contains the documentation supporting its request to be designated as a debt
collection center? (M)

4. Does the proposal indicate what types of debts the agency wishes to
cross- service and its success at collecting its own delinquent accounts?
(M)

5. Has the agency discontinued all servicing activities at the time the debt
is referred to Treasury for cross- servicing? (M)

Identify accounts selected

6. Does the automated system compare delinquent loan account information to
statutory criteria to select delinquent loan accounts for possible referral?
(M)

7. Does the automated system generate notification to the debtor of the
agency's intent to

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Treasury cross- servicing Yes/ no na Explanation

refer the debt to a debt collection center? (M)

8. Does the automated system update the loan information store? (M)

9. Does the automated system identify accounts that can no longer be
serviced by agency personnel? (M)

Monitor accounts referred to the debt collection center

10. Does the automated system identify accounts with monetary adjustments
that must be reported to the debt collection center? (M)

11. Does the automated system provide an ad hoc reporting capability needed
to monitor the accounts referred to a debt collection center and the amounts
recovered? (M)

12. Does the automated system interface with the core financial system to
record receipts remitted to the agency? (M)

13. Does the automated system apply collections received from the debt
collection center according to agency application rules? (M)

14. Does the automated system record collection fees in accordance with
agency program requirements? (M)

15. Does the automated system process agency or debt

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Treasury cross- servicing Yes/ no na Explanation

collection center refunds, notify the debt collection center as appropriate,
and update the loan information store? (M)

16. Does the automated system notify the debt collection center of
adjustments, recalls of debt, or collections received by the agency on the
referred debt?

(M)

17. Does the automated system remove from the accounting and financial
records accounts that the debt collection center recommends should be
written off? (M)

Use an agency authorized to cross- service

18. Does the automated system identify the volume and type of debts
serviced? (M)

19. Does the automated system identify the tools used by the agency to
collect its own debt?

(M)

20. Does the automated system provide one or more years of information on
the average age of debt over 180 days? (M)

21. Does the automated system calculate the amount of debt collected using
various collection tools? (M)

22. Does the automated system accrue late charges, as required by the
referring agency? (M)

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Treasury cross- servicing Yes/ no na Explanation

23. Does the automated system provide information to the referring agency
sufficient for the referring agency to satisfactorily complete the Report on
Receivables Due From the Public? (M)

24. Does the automated system track, by portfolio, age of debt referred,
dollar and number of referrals, collections on referred debts and monthly
report to Treasury? (M)

25. Does the automated system provide information to the referring agency as
needed, i. e., collections received? (M)

26. Does the automated system provide ad hoc reporting capability needed to
satisfy referring agencies' unique information requests, such as length of
workout agreements and percent of debt that can be compromised? (M)

Internal management information requirements

27. Are the internal management information requirements available to agency
credit program managers and designated internal review officials on a
periodic or on an as requested basis? (M)

28. Has the agency determined the specific management information needs
necessary to manage its credit programs based on the agency mission

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Treasury cross- servicing Yes/ no na Explanation

and applicable statutory requirements? (M)

29. Does the agency maintain financial accounting information at appropriate
levels of summary for computational and reporting purposes (transaction,
loan history, risk category, cohort, and account)? (M)

30. Has the agency determined whether the information should be provided on
hard copy reports or through system queries? (M)

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Other reporting requirements Yes/ no na Explanation

Transaction history

1. Is the system capable of producing a complete transaction history of each
loan? (M)

External reporting requirements

2. Is the system capable of supporting the external reporting requirements
of OMB and Treasury, including those associated with the Federal Credit
Reform Act (FCRA) of 1990 and the CFO Act of 1990?

(M)

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Records retention Yes/ no na Explanation

1. Is the destruction of agency records, created within the federal
government, approved by NARA per 36 CFR 1228? For questions regarding the
disposition of federal records, contact:

Life Cycle Management Division National Archives and

Records Administration 7 th Street and Pennsylvania

Avenue NW Washington, DC 20408.

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

(193005)

______________________________________________________________________________

Related Products

______________________________________________________________________________
GAO- 01- 371G – Guaranteed Loan System Requirements Checklist (3/ 01)
These related products address three main categories: internal control,
financial

management systems, and financial reporting (accounting standards). We have
developed these guidelines and tools to assist agencies in improving or
maintaining effective operations and financial management.

Internal Control

Standards for Internal Control Streamlining the Payment Process in the
Federal Government While Maintaining Effective Internal GAO/ AIMD- 00- 21.
3.1, November 1999. Control GAO/ AIMD- 00- 21. 3.2, May 2000.

Determining Performance and Accountability Challenges and High Risks GAO-
01- 159SP, November 2000.

Financial Management Systems

Framework for Federal Financial Inventory System Checklist Management 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 Requirements
Cost Accounting Checklist Checklist GAO/ AIMD- 99- 21. 2.9, January 1999.
GAO/ AIMD- 00- 21. 2.2, February 2000.

Human Resources and Payroll Direct Loan System Requirements Systems
Requirements Checklist Checklist GAO/ AIMD- 00- 21. 2.3, March 2000. GAO/
AIMD- 00- 21. 2.6, April 2000. Travel System Requirements Seized Property
and Forfeited Assets Checklist Requirements Checklist GAO/ AIMD- 00- 21.
2.8, May 2000. GAO- 01- 99G, October 2000.

Financial Reporting (Accounting Standards)

We anticipate completing two items under this category by late summer 2001.

These documents are available on the Internet on GAO's Home Page ( www. gao.
gov) under “Other Publications, Accounting and Financial
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