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Hot Topic Tuesday –  GAO Reports Finds Lack of PPP Oversight

June 30, 2020

By: Caity Witucki
Contributing Editor, Hot Topic Tuesday

Hot Topic Tuesday –  GAO Report on Lack of PPP Oversight

Last Thursday, the Government Accountability Office (GAO) released a report urging the SBA and other government agencies to enact PPP loan fraud risk management policies. In the report, the GAO said that “because of the number of loans approved, the speed with which they were processed, and the limited safeguards, there is a significant risk that some fraudulent or inflated applications were approved.”

In response to these findings, the GAO made the following recommendations:

  • The Administrator of the Small Business Administration should develop and implement plans to identify and respond to risks in the Paycheck Protection Program to ensure program integrity, achieve program effectiveness, and address potential fraud, including in loans of $2 million or less.

  • The Commissioner of Internal Revenue should consider cost-effective options for notifying ineligible recipients on how to return payments.

  • The Secretary of Labor should, in consultation with the Small Business Administration and the Department of the Treasury, immediately provide information to state unemployment agencies that specifically addresses the Small Business Administration’s Paycheck Protection Program loans, and the risk of improper payments associated with these loans.

As of June 29, 2020 the GAO contends that the SBA has still not provided sufficient responses to requests for information about PPP loan fraud safeguards. The GAO reports that the SBA has failed to provide information that is “critical” to its review.  

“Unfortunately, the report minimizes the historic work that SBA has undertaken to implement the CARES Act and mischaracterizes SBA’s engagement with GAO,” says Jennifer Kelly, a spokeswoman for the SBA. “While providing emergency economic relief to millions of small businesses nationwide, SBA made senior officials available for interviews with GAO and produced hundreds of pages of documents to GAO. SBA, while carrying out work that is unprecedented in scope and scale, prioritized providing information that GAO expressly asked for and information that directly responded to GAO’s questions. SBA continues to provide additional information to GAO on a rolling basis.”

The GAO will publish the updated status of its recommendations here

Source:
GAO Report
Fortune




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