High fraud risk pandemic loan program, auditor says


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WASHINGTON (AP) – Emergency loans to small businesses during the coronavirus pandemic have been added to a list of government programs considered to be at high risk of waste, fraud or mismanagement.

The most common of these emergency loans, PPP loans, are given at a low interest rate and are fully repayable under terms that include spending a certain percentage on salary costs. The loans were created by Congress and have proven to be extremely popular as shops, restaurants and other small businesses try to survive the pandemic.

The Government Accountability Office said on Tuesday that millions of small businesses were benefiting from emergency loans, but the speed with which relief programs were put in place limited the collateral needed to identify risks, “including susceptibility to risk. inappropriate payments and potential fraud “.

The Small Business Administration made or guaranteed more than 14.7 million loans and grants totaling about $ 744 billion between March and December. Congress approved an additional $ 304 billion in emergency loans in December.

GAO said in the report that in January it continued to experience delays in obtaining key loan information, including detailed monitoring plans and documents to estimate inappropriate payments.

“There is no doubt that they have had a positive impact. However, the management of these programs needs to be drastically improved, ”US Comptroller General Gene L. Dodaro told reporters when previewing the report.

Government auditors publish a high-risk list near the start of each new Congress. The list is designed to draw attention to the shortcomings cited by GAO and to prompt action that can often save taxpayer dollars and improve government operations.

The listeners also added the government’s efforts to prevent drug abuse to the high-risk list. The GAO warned at the start of the pandemic that it would. At the time, he noted that the pandemic could fuel conditions that contribute to drug abuse, such as unemployment.

In December, the Centers for Disease Control and Prevention reported the largest ever increase in drug overdose deaths in a 12-month period that ended the previous May. The CDC has noted a particular acceleration in drug overdose deaths as widespread mitigation measures have been put in place.

“It’s heartbreaking,” said Sen. Rob Portman, R-Ohio.

Portman said the country and his home state finally saw a drop in overdose deaths in 2018 for the first time in decades.

“Substantial progress. And yet, now, with the pandemic, as part of this horrific pandemic, we have this horrible addiction crisis that has developed, ”Portman said.

Listeners said it will be difficult to maintain sustained attention to the drug abuse problem in the coming months with agencies focused on fighting the pandemic.

“This makes the development and implementation of a coordinated strategic approach all the more important as agency resources are also diverted, in part, to pandemic priorities,” the report said.

On a positive note, GAO said the Defense Department has made concerted progress in aligning its support infrastructure with the needs of the country’s military forces. He removed the support program from his high risk list.

For example, citing progress, listeners said the military reduced its leased footprint in the Washington DC area from a peak of 3.9 million square feet in 2011 to around 1 million square feet. in September 2019.


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