As Congress struggles to approve $900 billion in stimulus funding, a new report shows management of last loan program was so bad an audit can't be done on where $670 billion in taxpayer money went

  • The $670 billion PPP loan program cannot be audited due to poor management, an oversight agency disclosed in a report Friday evening.
  • The Office of the Inspector General for the Small Business Administration also noted glaring mistakes, such as $6 billion in loans not disbursed. 
  • The SBA pushed back on five of the seven issues noted by auditors, and noted the PPP and other 2020 loan programs were historic in scope. 
  • "The SBA fully supports the requirements for auditability of its financial statements," the agency said in a rebuttal to the report. 
  • The PPP program has been accused of fraud, waste, and mismanagement — and of not providing sufficient records to the public. 
  • The report comes as Congress struggles to pass another massive stimulus package for the nation.
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As Congress struggles to approve $900 billion in stimulus funding this weekend, a new report Friday evening says this year's COVID-19 relief loan program was so badly managed that an audit cannot be conducted to see where hundreds of billions in taxpayer dollars went.

The $670 billion Paycheck Protection Program was so poorly documented by the US Small Business Administration that an audit cannot be conducted, the accounting firm KPMG said in a report Friday, and noted glaring mistakes including $6 billion in loans that were approved for US businesses — but never delivered. The KPMG audit was part of a report from the Office of the Inspector General for the US Small Business Administration.

The report also noted nearly $200 billion in loans were approved despite being flagged as potentially illegal, and nearly 900,000 accounting errors were not addressed. 

But sources close to the report, who noted it was signed off on late Friday just under a deadline, said the most striking aspect was the auditor saying records were so insufficient the firm could not evaluate one of the largest lending programs in US history, which has been accused of fraud, waste, and abuse.

"KPMG auditors found significant matters for which they were unable to obtain sufficient, appropriate audit evidence to provide a basis for an audit," the Office of the Inspector General for the US Small Business Administration wrote in the report. 

The SBA pushed back on the report in a Friday memo that disagreed with five of the seven findings of mismanagement. "The scope and scale of these programs and the speed with which the SBA responded were unprecedented in its history," Tami Perriello, the agency's chief financial officer, wrote. "The SBA fully supports the requirements for auditability of its financial statements and understands its obligations for providing accountability and transparency." The SBA did not immediately respond to a request for further comment.

KPMG, a 200-year-old global accounting firm, said in its report that "SBA was unable to provide adequate evidential matter in support of a significant number of transactions and account balances related to these programs due to inadequate processes and controls." 

KPMG noted glaring errors related to the agency's mismanagement:

  • The SBA approved 2 million guaranteed loans worth $189 billion despite the loans being flagged as potentially not in conformance with the CARES Act and related legislation.
  • The SBA reported approximately $6 billion of PPP loans approved but not disbursed due to unreported or unprocessed reports.
  • The SBA did not address 896,000 accounting errors in the outstanding loans.

KPMG went so far as to recommend disciplining SBA officials responsible for the mismanagement. "We recommend the Administrator to coordinate with the Chief Financial Officer to assign and hold accountable individuals responsible for overseeing management's design, implementation, and operation of SBA's internal control system." 

Despite the SBA's protests, KPMG stood by its work in a brief rebuttal, and the OIG said it found "no instances where KPMG did not comply in all material respects with US generally accepted government auditing standards."

This is not the first time government auditors have cited the SBA for mismanagement. In October, the Government Accountability Office warned Congress of a lack of internal safeguards.

The Trump administration, meanwhile, has sought less scrutiny into the loan program, with Treasury Secretary Steven Mnuchin suggesting in July that the government wipe out the debt from the guaranteed loans without evaluating how the money was spent, beyond some fraud controls.

The battle over auditing the $670 billion program comes as Congress hustles in a last-ditch effort to strike a deal on a $900 billion federal rescue package by midnight Sunday. 

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