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WASHINGTON — Long before the Energy Department lost $68 million on Abound Solar, a manufacturer that went bankrupt two years ago, it should have known that the company’s chance of repaying the loan it had guaranteed was deteriorating, according to a report by the department’s inspector general.

The damning report was issued as the Obama administration prepared to offer as much as $8 billion in additional loan guarantees.

The loan guarantee program has been a magnet for criticism since the failure of Solyndra in 2011; that company took $528 million in loans guaranteed by the Energy Department.

The new report, released Thursday, focused on loan guarantees extended to Abound Solar, which was initially offered $400 million. When the company missed several production milestones, the department cut off the loan guarantees, limiting the loss to taxpayers.

Solyndra failed mostly because the market price for solar equipment collapsed as a surge of Chinese producers flooded the market. That hit Abound too, but Abound also had quality problems. Its solar panels did not produce as much electricity as they were supposed to, and sometimes burst into flames.

According to the report, when an internal board at the Energy Department approved a loan guarantee in July 2010, the department staff believed that if the company failed, the government could still recover 38 percent of its money in a sale or liquidation. By the time the loan closed, staff members had reduced that estimate to 8.3 percent but did not tell the board, the audit found.

As quality control problems emerged — one customer returned $2.2 million worth of panels and others canceled orders — one outside engineer reported to the department that the problems could be fixed, while an internal expert recommended that the department cut off the flow of loan money. The department did not resolve the conflicting opinions, and it continued the loan guarantees, the inspector general said.

The Energy Department agreed that its process could be strengthened but disagreed with many of the specific findings. A change in the estimate of how much money could be recovered if Abound defaulted did not raise the chance of default, the agency said. And most of the problems raised by the outside engineering consultant were, in fact, answered by the department’s in-house solar expert, the department said in a reply.

The loan guarantee program was created in 2005 and signed into law by President George W. Bush, but no guarantees were actually issued until President Barack Obama came into office.