WASHINGTON – Today, the House Committee on Small Business Subcommittee on Investigations, Oversight, and Regulations heard from the Small Business Administration (SBA) Inspector General (IG) and Associate Administrator for the SBA’s Office of Entrepreneurial Development (OED) regarding the Inspector General’s audit of the SCORE program. The report, “Audit of SBA’s Oversight of the SCORE Association,” found commingling of restricted funds with unrestricted funds, lack of a uniform financial management system, and unsupported use of federal funds, including bonuses for executives and improperly awarded contracts.
“The Inspector General audit released in April 2019 stated that program officials need to make major improvements to the SCORE program to ensure effective financial oversight and performance measurement,” said Ranking Member Ross Spano (R-FL). “The problems identified in this SCORE audit are neither isolated or unique.”
SBA Associate Administrator Promises New Oversight Measures
“This lack of oversight and monitoring [found in the audits of SCORE]… hampered SBA’s ability to detect fraud, waste, and abuse in SCORE. It also led to a culture in SCORE in which whistleblowing was discouraged. In total, we made 27 recommendations to enhance the overall management and effectiveness of SCORE, 13 of which are closed,” said The Honorable Hannibal “Mike” Ware, Inspector General, Small Business Administration, in Washington, DC. “Program officials did not keep track of the total cost of the program and did not perform a complete financial examination of SCORE. Compounding these issues, SCORE relied on more than 300 accounting systems to track federal funds, which affected its ability to perform effective oversight.”
Mr. Ware said, “My auditors determined that the volunteers placed in charge of the chapter funds are not properly guided on the requirement of separating [restricted and unrestricted] funds. With no uniform accounting system in place, it’s almost impossible to [detect possible abuse].”
Rep. Tim Burchett (R-TN) asked Mr. Ware about the OIG’s definition of “effective and efficient use of federal funds”. Mr. Ware said, “[Effective and efficient use of federal funds is] where proper internal controls are in place to mitigate the risk of any fraud waste or abuse in the programs…”
“The agency unfortunately did not exercise adequate program oversight in the past. SBA did not have proper internal controls in place to monitor the spending activities as outlined in the IG report. We have been correcting this and will be doing better in the future,” said Mr. Allen Gutierrez, Associate Administrator, Office of Entrepreneurial Development, Small Business Administration, in Washington, DC. “[we] will be performing [a financial] examination of SCORE for the first time in August… My office has successfully closed 90% of recommendations. We anticipate closing the remaining recommendations in the next two months.”