Audit Report 1-01: Results Act Performance Measurement for the 7(a) Business Loan Program.
Date Issued: Monday, December 4, 2000
Report Number: 1-01

On December 4, 2000, the OIG issued Audit Report 1-01, Results Act Performance Measurement for the 7(a) Business Loan Program.  In 1998, Congressional leaders requested that Inspectors General review how effectively their agencies are measuring performance under the Government Performance and Results Act of 1993 (Results Act) and the reliability of the underlying data. In response to these requests, the Office of the Inspector General initiated a series of audits to evaluate the performance indicators the Small Business Administration (SBA) developed for its major programs.

The audit assessed whether the SBA effectively implemented the performance measurement requirements of the Results Act for the 7(a) loan program. In enacting the Results Act, Congress intended to improve the efficiency and effectiveness of Federal programs by establishing a system to set goals for program performance and to measure results. To implement the Results Act, executive agencies must prepare multiyear strategic plans, annual performance plans that include performance indicators, and performance reports.

The objective of this audit was to determine if the SBA was effectively implementing the performance measurement requirements of the Results Act for the 7(a) loan program. To answer this objective, the OIG determined if: (1) program goals and performance indicators aligned with the mission, (2) the performance indicators focused on the results of the program in terms of efficiency and effectiveness, and (3) reliable supporting data existed.

Overall, the OIG found that (i) the SBA had not fully implemented the performance measurement requirements of the Results Act for the 7(a) loan program, and (ii) some of its underlying performance data was not reliable. Specifically, the program did not have performance indicators to determine the extent to which it was accomplishing its mission under the Small Business Act. Also, most indicators measured outputs, rather than outcomes. Outputs measure the level of activity or effort that was realized. Outcomes assess the actual results, effects, or impact of a program activity compared to its intended purpose. Furthermore, some of the program’s performance data was not reliable, due primarily to the lack of effective data verification and validation strategies and methods.

The OIG recommended that the Associate Administrator, Office of Financial Assistance in coordination with the Director, Office of Policy: (i) develop appropriate program performance indicators and goals, (ii) institute a strategy to verify and validate performance measurement data, and (iii) require managers to attest to the accuracy and completeness of performance data.