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Audit Report 4-07: Audit of Puerto Rico and US Virgin Island District Office Consponsored and SBA-Sponsored Activities

Date Issued: 
Tuesday, January 20, 2004
Report Number: 
4-07

On January 20, 2004, the OIG issued Audit Report 4-07, Audit of Puerto Rico and US Virgin Island District Office Consponsored and SBA-Sponsored Activities.  The objective of this audit was to determine if the district office complied with Federal laws and Small Business Administration policies and procedures when planning and conducting SBA-sponsored and co-sponsored activities.  The OIG reviewed consponsorship activities that the district and the Business Resource Center conducted between October 1999 and May 2002. 

The OIG concluded that district and BRC consponsorship events were not planned and conducted in accordance with Federal laws and SBA policies and procedures.  Specifically, the OIG reported 1 finding  and 11 recommendations based on the following problems identified during  the audit :  (1) consponshorship agreements either were not properly approved or prepared, and included an ineligible consponsor; (2) procurements were made without contracting authority, (3) gift funds were solicited and accepted rom proscribed (i.e., prohibited) sources; (4) gift funds solicited by the district were not deposited to the Business Assistance Trust (BAT) Fund, (5) fees were charged inappropriately, (6) cosponsor contributions were used for unauthorized purposes, (7) unused Economy Act and gift funds either were not returned or returned untimely, (8) counseling services were improperly included as part of the BRC’s activity, (9) amendments to the BRC consponsorship agreement were executed improperly, (10) plans to use residual cosponsor funds were inappropriate; and (11)record-keeping, reporting, and asset accountability were inadequate. 

The administration agreed with two recommendations, disagreed with two recommendations, and neither agreed nor disagreed with seven recommendations.  The administrators stated that the draft report raised many serious issues and while the Agency agreed with many of the points, there were instances in which the report’s language was not clear and some fact-based issues for which details of the occurrences were not given.  They also stated that it was necessary for the Agency and the Office of Inspector General to use precise and consistent terms and definitions because they believed that the Agency and OIG were not using the same terminology.  Because of Agency concerns and comments, the OIG revised or deleted portions of the audit report.