Report 16-15: SBA’s FY 2015 Progress in Reducing Improper Payments

On May 13, 2016, the Office of Inspector General issued Audit Report 16-15, SBA’s FY 2015 Progress in Reducing Improper Payments. Our objectives were to (1) determine whether SBA complied with IPERA using guidelines outlined in the Office of Management and Budget Memorandum M-15-02, Appendix C to Circular No. A-123, Requirements for Effective Estimation and Remediation of Improper Payments, and (2) assess SBA’s progress in remediating improper payment-related recommendations.  To achieve our objectives we assessed controls SBA has implemented to address prior year OIG recommendations and evaluated whether SBA mitigated those risks. We also assessed SBA’s efforts to prevent and reduce improper payments and reviewed the accuracy and completeness of improper payment disclosures in the 2015 Agency Financial Report (AFR).  

Our overall qualitative review showed that SBA continued to make progress in its efforts to prevent and reduce improper payments.  SBA published and posted an AFR on its website, conducted program-specific risk assessments, published improper payment estimates for all programs and activities identified as susceptible to significant improper payments, published extracts from the applicable programmatic corrective action plans in the AFR, reported a gross improper payment rate of less than 10 percent for six of seven areas tested for FY 2015 reporting, and published and met the annual reduction target for three of the applicable seven areas tested.

However, SBA was not compliant with IPERA reporting requirements; disbursements for goods and services had an improper payment rate that exceeded the 10 percent threshold; and Sections 7(a) and 504 loan guaranty approvals, Hurricane Sandy disaster relief grants, and disbursements for goods and services did not meet their annual reduction target. 

The report contains four recommendations that SBA generally agreed to address.  SBA implemented Recommendation 1; therefore, it is considered closed.  Recommendations 2, 3, and 4 will remain open until OIG receives documentation demonstrating that these recommendations have been addressed.  We requested that SBA provide us within 90 days their progress in addressing these recommendations.