Kentucky Small Business Development Center’s Compliance with Cooperative Agreement Requirements

The Office of Inspector General (OIG) is issuing this inspection report to determine whether the SBDC met financial, programmatic, and performance requirements as prescribed in the terms and conditions of the cooperative agreement. The Small Business Administration (SBA) is authorized to make grants to states, institutions of higher education, and Women’s Business Centers to establish Small Business Development Centers (SBDCs). SBDCs, which generally consist of a lead center that manages a network of service centers, provide free business consulting and low-cost training to small businesses.

For every dollar received from SBA, SBDCs are required to provide an equal amount of funds. For program year (PY) 2023, SBA awarded the Kentucky SBDC $1,756,008 in federal funds and the SBDC contributed $1,756,008 in matching funds, for a total of $3,512,016. The period of performance for PY 2023 was from January 1, 2023, through December 31, 2024.The SBDC generally met financial requirements as prescribed in the agreement for the transactions we reviewed.

We made five recommendations for SBA to enhance and enforce financial and program compliance to strengthen program integrity, and address risks in program performance.

Management agreed with Recommendations 1 through 4 and disagreed with Recommendation 5. Notwithstanding the one disagreement, management’s actions to work with the Kentucky SBDC officials to review questioned costs, update the SBDC’s website to include service center hours and addresses, evaluate the whistleblower policy, and review reported counseling hours and capital infusion transactions resolved all recommendations.