Fraud Friday – 15% of SVOG Awards did Not Match the Approved Budgets

July 8, 2022

Delaney Sexton
Contributing Editor

Fraud Friday – 15% of SVOG Awards did Not Match the Approved Budgets

The SBA Office of Inspector General recently released a report about SBA’s award and payment practices in relation to the Shuttered Venue Operators Grant program using 10 SVOG awards worth $33.2 million as a sample to test.

The OIG found that the SBA changed its original plan to disburse funds in multiple payments to a single disbursement, making it harder to detect misuse of the grants. In addition, they did not ensure award amounts were properly calculated for 3 out of the 10 awards the OIG evaluated. In two of the grants, officials determined the applicants should receive a larger amount than requested and provided that larger amount, but they did not provide any supporting documentation. For the other grant, officials disbursed $4.9 million but later realized the recipient was only eligible for $3 million.

During the OIG’s review, they identified that 15% of the total program grant awards were disbursed without ensuring that the budgets matched the grant awards. Grantees were also allowed to make budget changes without prior approval from the SBA.

According to the OIG, in all of the ten awards evaluated, the SVOG notices were issued without government-authorized approval signatures.

There were six recommendations provided to the SBA:

  1. Establish procedures to use a risk-based approach for disbursing award funds for future disaster grant programs.
  2. Ensure all SVOG program notices of award are signed by an authorized government official and remedy any awards not entered into by an authorized government official.
  3. Recover the $1.9 million of overpayments to a grant recipient.
  4. Remedy or recover the $683,000 of awards made without adequate support for the award amount.
  5. Require the reconciliation of the grant recipient’s budget to the final award amount prior to awarding a grant and discontinue the disbursement of grant awards prior to the receipt of a revised budget.
  6. Reassess SBA’s flexibility in allowing waivers for budget changes between line items or implement monitoring procedures to mitigate risks of recipients using funds for unallowable expenses during the grant performance period.

The SBA has resolved or partially resolved each of the six recommendations, and the recommendations can be closed once the OIG is given the necessary documentation.

OIG Report