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LITTLE VALLEY – Instability in reporting and a need to bring the process under the roof of the County Center topped the list of problems found in an audit of the Cattaraugus County Microenterprise Development Fund, according to the State Comptroller’s Office.

The fund didn’t have adequate oversight over delinquent accounts, according to the report. It said the county, through the Business Development Corporation, did not receive the quarterly and annual reports in a timely manner, nor were the details sufficient.

That alleged delinquency resulted in the inability of the county treasurer, who had oversight of the program, to address account delinquency, the report said. Auditors randomly looked into the files of nine loans totalling $24,847.

The fund lends money to businesses that many financial institutions consider too risky for a loan. The loans are contingent on a proper application, submission of a business plan and completion of business classes by the applicant within a year of approval of the loan.

Since the loans go out to what are considered high-risk clients, some level of delinquency and less-than-full repayment is always present. County Administrator John R. Searles said that level has been right around 8 percent, lower than the majority of similar programs that exist elsewhere.

The loan fund files were also found to be incomplete, the auditors said, but Searles disagreed. The loan requirement of the classes can be waived under very specific guidelines. According to auditors, those records were not present in the files, nor were they presented when requested.

The audit report acknowledges that the list of loan recipients who had completed the training or had it waived was submitted by the treasurer.

But auditors admonished the county treasurer for his office’s alleged inability to adequately pursue funds that were overdue. The auditors reasoned that, since reports were coming to him with insufficient information, he could not completely and properly know the status of all the loans, as is required.

“The Treasurer offered to provide record of correspondence on all nine loans at the exit conference,” Searles said in his rebuttal letter. “The auditors chose to review only four of the files. All of the delinquent accounts had been contacted.

“It was stated to the auditors, at the exit conference and prior, that while no formal reports had been issued, during the monthly meetings, the treasurer was provided with physical delinquency reports to review, and backup documentation pertaining to such,” Searles said.

Since the audit was completed, the fund has been moved from the development corporation and is now under the direction of the Department of Economic Development, Planning and Tourism.

“Coming out of the audit, it was already in the 2013 budget process to pull the program in-house,” Searles said.

The county has six months to develop a corrective action plan and submit it to the Comptroller’s Office.