WASHINGTON - Small Business Administration officials are bristling over a report that says the agency is not exercising enough due diligence over its principal loan program.

In a report issued Jan. 17, the General Accounting Office said that the agency is highly susceptible to fraud because it does not properly scrutinize the activities of preferred lenders under its 7(a) program and relies on outdated computer technology. The report was part of a series targeting government agencies as mismanaged and at high risk for waste and abuse.

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