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) 2023 compliance with the Act. The auditor was engaged to review the payment integrity section of SBA’s Agency Financial Report Fiscal Year 2023 (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 8 of the 10 reporting requirements under the Act and Office of Management and Budget guidance. Specifically, SBA is not compliant with the Act because it did not:• Publish improper and unknown payment estimates in the FY 2023 agency AFR and accompanying materials for the Restaurant Revitalization Fund, Shuttered Venue Operators Grant, and payments for covered loans in the 7(a) and 504 loan guaranty programs under the Debt Relief Program.• Use appropriate sampling and estimation methodology plans for disaster assistance loans, Coronavirus Disease 2019 (COVID-19) Economic Injury Disaster Loans (EIDL), and EIDL Targeted Advance programs and activities.• Did not publish effective corrective action plans for the disaster assistance loans, PPP loan forgiveness, and PPP loan guaranty purchases programs and activities.• Demonstrate improvements to payment integrity for 7(a) loan guaranty approvals, 7(a) loan guaranty purchases, 504 Certified Development Company loan approvals, disaster assistance loans, and COVID-19 EIDL programs and activities as the improper payment estimates increased between FYs 2022 and 2023.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.
Open Recommendations
| Recommendation Number | Significant Recommendation | Recommended Questioned Costs | Recommended Funds for Better Use | Additional Details | |
|---|---|---|---|---|---|
| 1 | Yes | $0 | $0 | ||
| Continue to provide training and collaborate with program office staff to ensure the timely and complete reconciliation of the population of transactions used for estimating improper payments to the general ledger is performed, as needed. | |||||
| 2 | Yes | $0 | $0 | ||
| Proactively seek and obtain guidance from OMB in the first year of a new program’s implementation and develop a plan to ensure compliance with PIIA reporting requirements, as needed. | |||||
| 3 | Yes | $0 | $0 | ||
| Enhance existing procedures using the framework in the Government Accountability Office’s Green Book to design and implement robust internal and quality control processes to ensure complete and accurate reporting of annual improper payment results and formalized risk assessment processes to ensure all programs and activities are considered sufficiently to meet PIIA reporting objectives. | |||||
| 4 | Yes | $0 | $0 | ||
| Design and implement enforceable actions and controls to hold lenders accountable for not providing all documentation requested for loan samples in a timely manner. | |||||
| 5 | Yes | $0 | $0 | ||
| Formally document and implement additional preventative and monitoring controls to determine the eligibility of loans prior to loan approval and payments and loan guaranty purchases. | |||||
| 6 | 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. | |||||
| 7 | Yes | $0 | $0 | ||
| Exercise effective management review controls over the statistician’s work product 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 implement effective communication and review processes with responsible staff involved in the payment integrity reporting process to ensure compliance for the reporting of new programs and activities. | |||||
| 9 | Yes | $0 | $0 | ||
| Design and document adequate review procedures to ensure that the results of the sample meet the PIIA objectives. | |||||
| 10 | Yes | $0 | $0 | ||
| Design and implement a formal review process to ensure corrective actions plans developed, implemented, and published are adequately addressing the true root causes of improper and unknown payments. | |||||
