Audit of New York Small Business Center’s Phase 2 Technical Assistance Grant

This report presents the results of our audit of New York Small Business Development Center’s (NYSBDC) performance and costs.  The Disaster Relief Appropriations Act of 2013 gave the Small Business Administration’s (SBA’s) Office of Entrepreneurial Development (OED) $19 million to provide technical assistance to small businesses recovering from Hurricane Sandy.  Using these funds, OED awarded grants to its resource partners in two phases.  We audited the $6.2 million grant SBA awarded to NYSBDC for Phase 2 to determine whether NYSBDC complied with grant requirements related to Federal expenditures and program performance.

We found that both NYSBDC and OED needed to improve their methods for gathering and reporting performance data.  NYSBDC attempted twice to retroactively produce detailed records to support its quarterly performance report as of June 30, 2015, but in both cases, the queries resulted in significantly lower outcomes than previously reported.  Similarly, we requested that OED provide detailed reports from their database supporting these results, but they also could not produce those reports because they had not established a method to differentiate Hurricane Sandy grant performance from core grant funding performance.  Consequently, the grant’s reported performance is significantly higher than either NYSBDC or OED can support.  NYSBDC originally reported that it had helped its clients obtain $39 million in financial assistance as of June 30, 2015, but it could only support $19 million—about 51 percent less than the reported amount.

We also questioned almost $55,000 of NYSBDC incurred costs that were neither allowable nor allocable to the grant.  Specifically, NYSBDC included personnel costs unrelated to Hurricane Sandy technical assistance and incurred advertising costs that were general in nature and not specific to Hurricane Sandy technical assistance.

SBA partially agreed with three recommendations and disagreed with two recommendations in the report.  SBA stated that it had refined its internal guidelines and protocols for disaster technical assistance grants and believes that this will mitigate the weaknesses identified in our audit.