Watchdog finds Covid loan program at high risk of fraud – Courthouse News Service
A new report says the early roll-out of emergency small business loans has increased the potential for fraud and mismanagement.
WASHINGTON (CN) – Emergency small business loans established during the Covid-19 pandemic landed on the Government Accountability Office’s high-risk list on Tuesday, while the U.S. Postal Service and the 2020 census remain subjects of concern.
Every two years, the oversight agency publishes a list of federal programs considered highly vulnerable to fraud, waste or mismanagement.
Among those added to the GAO list last report are the Paycheck Protection Program and the Expanded Eligibility for Economic Injury Disaster Loans, both of which provide small business loans to help mitigate the negative economic impact of the pandemic.
“While loans have greatly helped many small businesses, evidence of fraud and significant risks to program integrity requires much greater oversight and management attention,” GAO wrote in a summary of its report. conclusions.
The Small Business Administration provided an estimated $ 744 billion in loans last year under programs to help small businesses recover and to Congress passed a bill in December, allocating an additional $ 304 billion for emergency relief.
The surveillance report indicates that the relief programs were put in place quickly, which limited the implementation of appropriate safeguards to identify risks which include “vulnerability to irregular payments and potential fraud”.
“So far, the federal government has allocated more than $ 2 trillion to help mitigate the devastating impact of the coronavirus. We know that the risk of fraud and abuse increases when large sums are spent quickly, eligibility criteria are developed or changed, and new programs are put in place, ”said Gene L. Dodaro, Comptroller General of the United States and head of the GAO. declaration.
The agency cited continued delays in obtaining key loan information, including monitoring plans and documentation to estimate irregular payments.
“We rely on the public’s help in identifying inappropriate activities or program weaknesses that warrant close scrutiny. Allegations reported to FraudNet can alert us, potentially early on, to the questionable use of the CARES Act and other relief funds, ”Dodaro added.
Using evaluation criteria that include leadership commitment, agency capacity, detailed action plans, monitoring efforts and demonstrated progress, GAO found a total of 36 areas in government agencies that must face the risks of fraud, waste or mismanagement.
Under the leadership of the Postmaster General appointed by Donald Trump Louis DeJoy, the report says, the U.S. Postal Service went from performing in a few areas in 2019 to not meeting any of the criteria.
GAO found that the Postal Service’s spending “exceeded revenue by $ 18 billion in fiscal 2019 and 2020 as its labor compensation costs continued to rise as the volume of its most profitable courier products continued to decline ”.
In addition, the watchdog has partly blamed the Trump administration for the failure of the US Census Bureau to meet the criteria necessary to limit vulnerabilities in the ten-year count.
He says the Census 2020 remains in the high-risk category due to the Commerce Department’s decision to shorten the Census Bureau’s deadline for data collection.
After being forced to delay field operations last spring due to the coronavirus pandemic, the agency drew up a new plan to extend data collection from July to October 2020. The Bureau also extended the deadline data processing until April 2021.
President Trump issued an ordinance last summer that sought to exclude undocumented immigrants from the state’s population count used to allocate congressional seats among states, which has resulted in the blocking of legislation amending the states. deadlines in the Senate under Republican control.
The administration then chose to end the workforce early and cut data processing time by almost half.
“Squeezing the time to collect data and process responses has increased the risk of compromising data quality,” the report says.
The GAO removed the Department of Defense’s supporting infrastructure management from the high-risk list, finding that the agency made more efficient use of military installation space, reduced its infrastructure footprint, and lowered basic support costs.