REVIEW OF SBA CONTROLS OVER CASH GIFTS 

Report Number: 11-09 


Date Issued: March 18,2011 

u.s. 

Office 

Small 

Inspector 

Business 

General 

Administration Memorandum

To: Jonathan I. Carver 

Chief Financial Officer 

Date: March 18, 2011 

Jonathan Swain 

Assistant Administrator for Communication 

and Public Liaison 

Winslow Sargeant 

Chief Counsel for Advocacy 

Sara Lipscomb 

General Counsel 

From: 

lsi Original Signed 

Peter McClintock 

Deputy Inspector General 

Subject: Review of SBA Controls Over Cash Gifts 

Report No. 11-09 

This report represents the results of our audit ofthe SBA's controls over cash gifts. SBA has gift 

authority under Sections 4(g), 5(b)(9), 7(k)(2), and 8(b)(1)(G) ofthe Small Business Act (the 

Act). Employees may solicit and accept gifts on behalf ofthe SBA after proper approvals, 

including a conflict of interest determination by the SBA's Office of General Counsel (OGC). 

All gifts must be used in a manner consistent with the Act and any terms imposed by the donor. 

Section 4(g)(2) ofthe Act provides that any gift, devise, or bequest of cash accepted by the 

Administrator shall be held in a separate accountl and shall be subject to semi-annual audits by 

the Inspector General who shall report his findings to Congress. 

Our audit objective was to determine whether the SBA was following established procedures for 

soliciting, accepting, holding and utilizing cash gifts. To achieve our audit objective we obtained 

an understanding of laws, regulations, and the SBA's policies and procedures regarding its gift 

authority. We also interviewed selected SBA officials and examined documentation obtained 

from officials in the Offices of Strategic Alliances, Advocacy, and the Chief Financial Officer. 

Lastly, we examined 16 cash gifts that were posted to the Business Assistance Trust Fund (BAT 

Fund) between October 26,2010 and January 7, 2011. These gifts were utilized by the SBA's 

Office of Advocacy (OA) in support ofthe 30th Anniversary ofthe Regulatory Flexibility Act of 

1980 and the 2010 Jobs Creation Symposium. 

1 This account is called the Business Assistance Trust Fund (BAT Fund). 
2 

Our audit was performed in accordance with Government Auditing Standards issued by the 

Comptroller General ofthe United States. 

BACKGROUND 

The SBA Procedural Notice 7000-189, Gift Solicitation/Acceptance Procedures dated June 29, 

2010 stipulates the approval of cash and in-kind gifts, acceptable sources of gifts, conflict of 

interest determinations, and the requirement for certain executed documents for all cash gifts. 

In addition, SBA Procedural Notice 2000-677, Restatement ofProcedures for the Business 

Assistance Trust Fund (BAT Fund) dated June 18, 2004 stipulates SBA's policy for depositing 

cash gifts into, and expending money out of the BAT Fund. This notice also outlines the 

procedural steps for depositing a cash gift, expending the BAT Funds and tracking expenditures. 

During Fiscal Year 2010 the SBA's OA sponsored two events, and solicited and received 

financial support from 16 nonfederal organizations totaling $23,050. The 16 organizations are 

listed in Attachment 1: OA Cash Gifts. The cash gifts were posted to the SBA's BAT Fund 

between October 26,2010 and January 7,2011. 

In a prior audit2 

we found that the SBA: had improperly accepted cash gifts from prohibited 

sources; had not implemented adequate controls related to conflict of interest determinations; had 

not timely obligated funds for requisition expenditures; and had not implemented adequate 

record-keeping and accountability procedures. Corrective actions have been implemented by the 

SBA. 

AUDIT RESULTS 

The SBA followed established procedures for soliciting, accepting, holding and utilizing 16 cash 

gifts totaling $23,050. Specifically, SBA Procedural Notice 7000-189 includes explicit 

procedures regarding the roles and responsibilities of SBA officials for soliciting and accepting 

cash gifts. The SBA substantially complied with the procedures stipulated in this notice. 

The donors were properly vetted through SBA program offices to ensure no business 

relationships existed that would cause a conflict of interest. The SBA's OGC confirmed that no 

conflict of interest existed between the SBA and the 16 organizations that donated cash gifts 

totaling $23,050. The SBA also deposited cash donations and made the funds available to 

the OA for expenditure. Lastly, the SBA expended BAT Funds for authorized purposes in 

accordance with the Act and SBA Procedural Notice 2000-677. 

At the exit conference, we discussed the results of our audit. We also discussed matters that 

could improve the SBA's controls over cash gifts. These matters included: advance planning of 

events where cash gifts will be solicited; more specific procedures regarding the use ofBAT 

Funds for certain expenditures; delegation of authority for certain activities; maintenance of 

records and document retention, and updating an outdated procedural notice. We concluded these 

matters did not rise to the level of reportable conditions and were not included as a finding in this 

report. SBA officials concurred with our recommended improvements. 

We appreciate the courtesies and cooperation ofthe Agency officials during this audit. If you 

have any questions concerning this report, please call me at (202) 205-6586, or Jeff Brindle, 

Director Information Technology and Financial Management at (202) 205-7490. 

2 OIG Report 5-28, Review a/Procedures/or Cash Gifts dated September 30, 2005. 
3 

ATTACHMENT 1: OA CASH GIFTS 

Name of Donor Brief Description Gift Amount 

1 Aircraft Owners and Pilots 

Association 

Cash to support the OA Conference for the 30th 

Anniversary ofthe Regulatory Flexibility Act 

$500 

2 American Cable Association Cash to support the OA Conference for the 30th 

Anniversary ofthe Regulatory Flexibility Act 

$1,000 

3 American Foundry Society Cash to support the OA Conference for the 30th 

Anniversary ofthe Regulatory Flexibility Act 

$500 

4 American Trucking 

Association 

Cash to support the OA Conference for the 30th 

Anniversary ofthe Regulatory Flexibility Act 

$500 

5 Associated Builders & 

Contractors, Inc. 

Cash to support the OA Conference for the 30th 

Anniversary ofthe Regulatory Flexibility Act 

$1,000 

6 Brick Industry Association Cash to support the OA Conference for the 30th 

Anniversary ofthe Regulatory Flexibility Act 

$1,000 

7 Ewing Marion Kauffman 

Foundation 

Cash to support the OA Conference for the 30th 

Anniversary ofthe Regulatory Flexibility Act 

$2,000 

8 National Automobile Dealers 

Association 

Cash to support the OA Conference for the 30th 

Anniversary ofthe Regulatory Flexibility Act 

$250 

9 National Mining Association Cash to support the OA Conference for the 30th 

Anniversary ofthe Regulatory Flexibility Act 

$1,000 

10 National Roofing Contractors 

Association 

Cash to support the OA Conference for the 30th 

Anniversary ofthe Regulatory Flexibility Act 

$1,000 

11 National Small Business 

Association 

Cash to support the OA Conference for the 30th 

Anniversary ofthe Regulatory Flexibility Act 

$500 

12 NFIB Legal Foundation Cash to support the OA Conference for the 30th 

Anniversary ofthe Regulatory Flexibility Act 

$1,000 

13 Portland Cement Association Cash to support the OA Conference for the 30th 

Anniversary ofthe Regulatory Flexibility Act 

$300 

14 Society for Human Resource 

Management 

Cash to support the OA Conference for the 30th 

Anniversary ofthe Regulatory Flexibility Act 

$5,000 

15 Specialty Equipment Market 

Association 

Cash to support the OA Conference for the 30th 

Anniversary ofthe Regulatory Flexibility Act 

$500 

16 VISA, Inc. Cash to support the OA Job Creation 

Symposium 

$7,000 

Total $23,050