The American Recovery and Reinvestment Act of 2009 (Recovery Act), which was signed into law on February 17, 2009, contains a number of SBA provisions intended to help unlock credit markets and promote economic recovery for the nation’s small business sector. These include reduced loan fees, higher guaranties, new SBA credit programs, secondary market incentives, and enhancements to current SBA programs. In order to provide enhanced levels of transparency and accountability, the Recovery Act and related implementation guidance require increased reporting and oversight to deter and detect fraud, waste, and abuse and ensure that program goals are met.
The OIG has developed oversight plans for deploying additional resources to monitor, evaluate, and report on the performance and oversight of SBA's programs under the Act. New programs and program changes increase risk, requiring the Agency to establish effective controls and adequate oversight. Therefore, the OIG has worked proactively with the Agency to identify risks and recommend cost effective controls to help prevent fraud, waste, and abuse, and ensure that program goals are achieved and stimulus funds are accurately tracked and reported. In particular, the OIG spent considerable time reviewing and providing comments on various program management documents that the Agency developed in connection with the Recovery Act. In response to the mandates in the Act that SBA implement program changes and establish several entirely new programs to promote financial assistance to small businesses, SBA issued a number of new and revised regulations, policy and procedural notices, and other program management documents. The OIG provided comments on a large number of these documents, recommending revisions to (1) ensure greater accountability by program participants and Agency employees and (2) establish more robust controls to prevent waste, fraud, abuse, and inefficiencies. Many of these recommendations were adopted, and OIG would like to recognize the Agency’s efforts to seek OIG review of these program management documents and its responsiveness in addressing the concerns identified by the OIG. The OIG also worked with the Agency to implement risk mitigation processes on programs revised or implemented by the Act.
The OIG has also conducted outreach efforts to raise fraud awareness, such as providing SBA lenders with information on detecting fraud patterns, presenting a fraud awareness briefing at a trade group event, and notifying the public of a phishing scam.
The OIG had a number of audits and reviews of Recovery Act programs that were nearing completion at the end of the reporting period, and plans to initiate a number of new projects during FY 2010, to include conducting periodic reviews of loan quality. The OIG will also assess whether the Agency has taken adequate steps to conduct oversight of programs funded by the Recovery Act. As risks are identified, the OIG has and will continue to provide Agency managers with comments and recommendations for ways to mitigate these risks. The OIG also plans to review Agency regulations and procedures for the new secondary market programs under the Recovery Act.
The OIG’s oversight plans and additional information regarding recovery oversight activities can be found on the OIG’s website at www.sba.gov/ig/recovery.
Unresolved Audit Recommendations Impacting the Recovery Act
To reduce risks associated with the funding under the Recovery Act, the Office of Management and Budget (OMB) has directed agencies to address deficiencies disclosed by prior audits and investigations in program areas under which Recovery Act funds are authorized. Where recommended final actions had not been completed, agencies were required to either expedite implementation of the recommendations or explain in their risk mitigation plans why such actions cannot or should not be taken.
To assist SBA in this effort, the OIG issued a report that identified 29 unresolved audit recommendations related to programs directly impacted by the Recovery Act or operational support processes that will impact the disbursement and financial reporting of Recovery Act funds. Final actions were overdue for 10 of the 29 recommendations, and other recommendations either did not have a management decision or had identified final actions that should be expedited due to the associated risks. The OIG’s recommendations address actions that are needed to: (1) strengthen oversight of 7(a) lenders; (2) identify and recover improper payments; (3) develop procedures and performance measures for the Microloan program; (4) enhance IT systems used to monitor and manage loan activity; and (5) improve contract award and administration.
Qualifications and Warrant Authority of SBA Contracting Personnel
An OIG review of the qualifications of SBA contracting personnel found that, while contracting officers had contracting certifications, the Agency issued new warrants to them without documentation of the specific training and education needed to support their certification levels. Therefore, the Agency was not in full compliance with OMB requirements to assure that contracting officers are qualified to properly administer contract actions, including $20 million in contracts planned under the Recovery Act. This review is discussed in more detail beginning on page 14.
For further information, please refer to the attached document.