Audit of SBA’s Oversight of Women’s Business Centers’ Compliance with Cooperative Agreement Financial Requirements

The Small Business Administration’s (SBA’s) Women’s Business Center (WBC) program assists women in starting and growing small businesses and provides long-term training and counseling to women business owners, including those who are socially and economically disadvantaged. SBA did not provide effective oversight over the WBC program. SBA program officials did not detect that WBCs in our sample: (1) failed to take corrective action to remedy accounting deficiencies identified during mandated programmatic and financial reviews and examinations; (2) made improper budget transfers and maintained general ledgers that did not support expenses; (3) used federal funds for unsupported, unallowable and unallocable costs; (4) reported unsupported matching funds and program income earned, and 5) failed to submit accurate financial reports. Further, program officials detected significant noncompliance that warranted removal of two WBCs from the program but did not take action. Additionally, program officials’ methodology for evaluating applicant risk was flawed, and resulted in inadequate oversight of the sample WBCs’ use of federal funds. As a result of weaknesses in SBA’s internal controls and limited oversight of the WBCs, program officials did not detect $801,056 in unallowable, unallocable, and unsupported costs, matching funds, and program income earned. We made 10 recommendations to improve SBA’s oversight and management of the Women’s Business Center cooperative agreements. SBA management concurred with all 10 recommendations, and its planned actions resolve the recommendations.