Independent Auditors’ Report on SBA’s Fiscal Year 2024 Compliance with the Payment Integrity Information Act of 2019

This independent auditors’ report on the U.S. Small Business Administration’s (SBA) improper payment reporting is required by the Payment Integrity Information Act of 2019. We contracted with the independent certified public accounting firm KPMG LLP to conduct a performance audit of SBA’s fiscal year (FY) 2024 compliance with the Act. The auditor was engaged to review the payment integrity section of SBA’s Agency Financial Report Fiscal Year 2024 and accompanying materials to determine whether the agency complied with the reporting requirements under the Act.

In the report, KPMG auditors found SBA was not compliant with reporting requirements under the Act and Office of Management and Budget (OMB) guidance. Specifically, SBA is not compliant with the Act because it did not:

• Publish improper and unknown payment estimates within the FY 2024 Agency Financial Report and accompanying materials for the Shuttered Venue Operators Grant and the payments for covered loans in the 7(a) and 504 loan guaranty programs under the Debt Relief Program (Section 1112 Payments).
• Design and implement adequate review procedures to produce reliable sample results that were used to develop and publish accurate improper and unknown payment estimates for the 7(a) loan guaranty purchases, disaster assistance loans, Paycheck Protection Program (PPP) loan forgiveness, and PPP loan guaranty purchases programs.
• Publish effective corrective action plans for the PPP loan forgiveness and PPP loan guaranty purchases and did not publish corrective action plans for the Section 1112 payment programs and activities. Also, the reduction targets were not published for the Section 1112 payments. Moreover, SBA did not appropriately disclose the root causes of improper payments for the disaster assistance loans program in the accompanying materials.
• Improve payment integrity for the 7(a) loan guaranty approvals and 504 Certified Development Company loan approvals programs and activities as demonstrated by the increase in improper payment estimates between FYs 2023 and 2024.
• Achieve an improper and unknown payment estimate of less than 10 percent for the PPP loan forgiveness, PPP loan guaranty purchases, and Restaurant Revitalization Fund programs and activities.

SBA concurred with the recommendations and indicated that it is committed to reducing the dollar amount of improper payments, ensuring program integrity, and continuing to implement effective risk management procedures in accordance with improper payment legislation, as well as guidance prescribed in OMB Memorandum M-21-19, Appendix C to OMB Circular A-123, Requirements for Payment Integrity Improvement.