Audit Report 14-02: The SBA’s FY 2012 Reported Improper Payment Rate for Disbursements and Contracting was Inaccurate and Incomplete

On October 24, 2013, the OIG issued Audit Report 14-02, The SBA’s FY 2012 Reported Improper Payment Rate for Disbursements and Contracting was Inaccurate and Incomplete.  This report presents the results of the OIG’s review of the SBA’s FY 2012 Invoice Payments for Contracting Activities.

The OIG found that the SBA made significant progress in reducing the improper payment rate for disbursements and contracting from 89 percent in FY 2011 to 9.6 percent in FY 2012. However, the OIG determined that the information presented in the SBA’s FY 2012 Agency Financial Report was inaccurate and the reported improper payment rate for FY 2012 disbursements and contracting was incomplete.  Specifically, the 9.6 percent improper payment rate included only a portion of the errors identified as the SBA did not report errors that it determined to be the result of inadequate or missing documentation.  Further, the OIG found that SBA personnel did not consistently apply the FY 2012 Improper Payment Test Plan for disbursements and contracting.  Consequently, they classified a number of payments as having met the test plan criteria.  In addition, they tested payments not related to contracting disbursements.  The OIG recommended four actions directed to the Chief Financial Officer to improve financial and contract management at the SBA and significantly decrease the total number of future improper payments.