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Report File
Date Issued
Submitting OIG
Small Business Administration OIG
Other Participating OIGs
Small Business Administration OIG
Agencies Reviewed/Investigated
Small Business Administration
Report Number
23-07
Report Description

This independent auditors’ report on the U.S. Small Business Administration’s (SBA) improper payment reporting is required by the Payment Integrity Information Act of 2019. We contracted with the independent certified public accounting firm KPMG LLP to conduct a performance audit of SBA’s Fiscal Year (FY) 2022 compliance with the Act. The auditor was engaged to review the payment integrity section of SBA’s Agency Financial Report Fiscal Year 2022 (AFR) and accompanying materials to determine whether the agency complied with the reporting requirements under the Act.In the report, KPMG auditors found SBA was not compliant with 9 of the 10 reporting requirements under the Act and Office of Management and Budget (OMB) guidance.• The agency’s risk assessment methodology did not consider certain identified risk factors to adequately conclude whether the Restaurant Revitalization Fund, Shuttered Venue Operators Grant, and the payments for covered loans in the 7(a) and 504 Certified Development Company loan guaranty programs under the debt relief assistance program were likely to include improper and unknown payments above or below the statutory threshold.• The sampling and estimation methodology plans were not appropriate for the SBA disaster assistance loans, COVID-19 Economic Injury Disaster Loans (COVID-19 EIDL), and Economic Injury Disaster Loan Targeted Advance programs and activities. • SBA did not demonstrate improvements to payment integrity for 7(a) loan guaranty purchases because the improper payment estimate increased between fiscal years 2021 and 2022, and• SBA did not publish improper and unknown payment estimates, corrective action plans, and reduction targets within the AFR and accompanying materials for PPP loan guaranty purchases and forgiveness activities.SBA indicates that it is committed to reducing the dollar amount of improper payments, ensuring program integrity, and continuing to implement effective risk management procedures in accordance with improper payment legislation.

Report Type
Audit
Agency Wide
Yes
Number of Recommendations
8
Questioned Costs
$0
Funds for Better Use
$0

Open Recommendations

This report has 6 open recommendations.
Recommendation Number Significant Recommendation Recommended Questioned Costs Recommended Funds for Better Use Additional Details
4 Yes $0 $0

Continue to provide training and collaborate with program office staff, as needed, to ensure the timely and complete reconciliation of the population of transactions used for estimating improper payments to the general ledger is performed.

4 Yes $0 $0

Continue to provide training and collaborate with program office staff, as needed, to ensure the timely and complete reconciliation of the population of transactions used for estimating improper payments to the general ledger is performed.

5 Yes $0 $0

Collaborate with the responsible staff involved in the payment integrity reporting process to ensure timely and complete reconciliations are performed on the populations subject to sampling for improper payment reviews.

6 Yes $0 $0

Formally document and implement appropriate preventative and monitoring controls prior to approval of 7(a) loan guaranty purchases.

7 Yes $0 $0

Exercise effective management review controls over the statistician’s work by verifying that the documentation of the sampling and estimation methodology plans comprehensively outlines the details of the implemented sampling and extrapolation methodology, while maintaining statistical validity.

8 Yes $0 $0

Design and document adequate review procedures to ensure that the results of the sample meet the PIIA objectives.

Small Business Administration OIG

United States