SBA’s FY 2016 Compliance with the Improper Payments Elimination and Recovery Act

The objectives of this report were to (1) determine whether SBA complied with Improper Payments Elimination and Recovery Act of 2010 (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 2016 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 2016 reporting, and published and met the annual reduction target for six of the applicable seven areas tested.

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

The report contains two recommendations to improve the effectiveness of improper payment controls over 7(a) loan guaranty purchases that SBA agreed to address.  We requested that SBA provide us within 90 days their progress in addressing these recommendations.