Federal Reports

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) 2025 compliance with the Act. The auditor was engaged to review the payment integrity section of SBA’s Agency Financial Report Fiscal Year 2025 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 reporting requirements under the Act and Office of Management and Budget (OMB) guidance. Specifically, SBA is not compliant with the Act because it did not:

• Publish complete and accurate root causes and tolerable rates for all applicable programs, including Section 1112 payments and disaster assistance loans, and ensure they agreed with accompanying materials and supporting documentation for FY 2025.
• Perform or document updated required risk assessments for all applicable programs in FY 2025.
• Design and implement adequate review procedures to produce reliable sample results that supported accurate improper and unknown payment estimates for Paycheck Protection Program (PPP) loan guaranty purchases.
• Provide sufficient documentation to support corrective action plans or ensure those plans aligned with root causes for PPP loan guaranty purchases.
• Ensure published root causes and reduction targets were accurately disclosed, published, and consistent with accompanying materials for all applicable programs, including 7(a) loan guaranty approvals, 7(a) loan guaranty purchases, 504 Certified Development Company loan approvals, disaster assistance loans, PPP loan forgiveness, and PPP loan guaranty purchases, and Section 1112 payments.
• Improve improper and unknown payment rates or meet established reduction targets for 7(a) loan guaranty approvals, 504 Certified Development Company loan approvals, disaster assistance loans, PPP loan forgiveness, and PPP loan guaranty purchases.
• Submit all required quarterly information to OMB for PPP loan forgiveness and PPP loan guaranty purchases.
• Publish improper payment and unknown payment rate estimates less than 10 percent for the PPP loan forgiveness, PPP loan guaranty purchases, and Shuttered Venue Operators Grant programs and include the required program integrity proposals in the congressional budget justification for the PPP loan forgiveness and PPP loan guaranty purchases programs.

SBA concurred with the recommendations and indicated 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, as well as guidance prescribed in OMB Memorandum M-21-19, Appendix C to OMB Circular A-123, Requirements for Payment Integrity Improvement.

U.S. International Development Finance Corporation (DFC), Office of Inspector General (OIG), Semiannual Report to Congress for the reporting period October 1, 2025 - March 31, 2026, in accordance with the Inspector General Act of 1978, as amended (IG Act). 

Congress enacted the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in March 2020. The CARES Act, “Federal Contract Authority,” Section 3610, clarifies that reimbursement requests must be reduced by any credits received from other COVID-19 relief programs, including Paycheck Protection Program (PPP) loans. There were 149 subcontractors that collectively received forgiveness for more than $196 million of PPP loans at the Portsmouth Paducah Project Office (PPPO) sites. In addition, the Department of Energy paid subcontractors about $13 million in Section 3610 safety pay from 2020 through 2022.

Given the risk, we initiated this audit to determine if the Department paid PPPO subcontractors for the same costs that were covered by forgiven PPP loans.

We identified approximately $5.2 million in duplicate payments, unsupported costs, and unallowable profit paid to the Department’s subcontractors at the PPPO that received CARES Act funds. Specifically, we identified 19 subcontractors that received approximately $2.6 million in either duplicate payments and/or unallowable profit under Section 3610. Additionally, we identified seven subcontractors that certified the need for PPP loan forgiveness after already billing and receiving $2.6 million in payments from the PPPO for work performed. These subcontractors also received loan forgiveness paid by the Small Business Administration for costs the Department already paid.

These issues were caused by incomplete policy guidance, inadequate oversight, and inappropriate behavior by subcontractors. For example, the PPPO did not enforce internal controls and labor monitoring during COVID-19 to prevent duplicate payments and erroneous reimbursements. In addition, the PPPO subcontractors did not always uphold ethical standards and comply with contract requirements.

To address the issues identified in this report, we have made seven recommendations that, if fully implemented, should help ensure that the Department’s safeguards reduce future risks associated with similar programs and protect taxpayer funds.