Audit Report 16-06: Small Business Development Center Hosted by Middle Tennessee State University

OIG’s Audit Report 16-06, Small Business Development Center Hosted by Middle Tennessee State University, presents the results of our audit of the Tennessee Small Business Development Center’s compliance with grant requirements.  Small business development centers (SBDCs) provide aspiring and current small business owners a variety of free business consulting and low-cost training services.  Typically, these SBDCs are hosted by universities and State economic development agencies and referred to as lead centers.  For every dollar that lead centers receive from the Small Business Administration (SBA), SBDCs must provide a dollar-for-dollar match.  SBA awarded about $1.9 million to the Tennessee SBDC (Lead Center) hosted by Middle Tennessee State University for calendar year 2013.  We audited the $1.9 million grant to determine whether the Lead Center complied with SBA grant requirements related to Federal expenditures and program performance.

We found the Lead Center generally complied with grant requirements relating to reporting, budget management, and control, and its Federal expenditures and matching contributions were, in general, properly authorized, classified, supported, and charged to the grant.  Of the $1.9 million that SBA awarded to the Lead Center, the approved budget designated nearly $1.2 million to be used for personnel costs.  However, a significant portion of the personnel expense transactions that we tested did not have sufficient documentation to indicate the actual time personnel spent working on the grant.  Because employees’ time and effort spent on the grant counted towards the Lead Center and subcenters’ required match, if this time and effort was overstated, the match could also be overstated.  OIG made two recommendations to improve the Lead Center’s financial and programmatic grant performance.  SBA management’s planned actions resolve both recommendations.