Report No. 17-03: Independent Auditors’ Report on the SBA’s FY 2016 Financial Statements

We contracted with the independent certified public accounting firm KPMG LLP (KPMG) to audit the U.S. Small Business Administration’s (SBA) consolidated financial statements for fiscal year (FY) 2016, ending September 30, 2016.  This audit is an annual requirement of the Chief Financial Officers’ Act of 1990, and was conducted in accordance with Generally Accepted Government Auditing Standards; the Office of Management and Budget Bulletin No. 15-02, Audit Requirements for Federal Financial Statements; and the U.S. Government Accountability Office’s Financial Audit Manual and Federal Information System Controls Audit Manual.  The independent auditors’ report presents an unmodified opinion on SBA’s consolidated financial statements for FY 2016.  Specifically, KPMG reported that:

• The financial statements were fairly presented in all material aspects in conformity with U.S. generally accepted accounting principles.
• There were no material weaknesses in internal control.
• There is a significant deficiency related to controls over the completeness and accuracy of data for SBA’s Secondary Market Guarantee credit reform model; and
• There is also a significant deficiency related to SBA’s information technology security controls, which has been identified in the past.

Details regarding KPMG’s conclusions are included in Exhibit I to this report.  The auditors did not report any instances or matters regarding noncompliance.  Within 30 days of this report, KPMG expects to issue a separate letter to SBA management regarding other, less significant matters that came to its attention during the audit.