Small Business Administration: Better Planning and Controls Needed for Information Systems
AIMD-97-94
Published: Jun 27, 1997. Publicly Released: Jun 27, 1997.
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Highlights
Pursuant to a congressional request, GAO reviewed the Small Business Administration's (SBA) efforts to develop a risk management database and a loan monitoring system, focusing on: (1) the status of SBA's development and implementation of the risk management database; (2) whether SBA has established adequate processes and controls to ensure that the database will contain complete and accurate loan data; and (3) whether SBA has performed the planning steps needed to serve as a basis for funding the development phase of the proposed loan monitoring system.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Small Business Administration | The Administrator, SBA, should establish data quality standards for the risk management database and implement a system of controls to ensure compliance with the standards. |
Closed – Implemented
SBA is developing data quality standards as part of its efforts to develop a new loan monitoring system (LMS). In June 1999, it adopted a Loan Programs Data Quality Plan that provides a framework for the development and implementation of data quality standards. In February 2001, SBA developed a Data Requirements document that specifies high-level approaches to implement the data quality framework.
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| Small Business Administration | For the proposed loan monitoring system, the Administrator, SBA, should not proceed with funding the system development until adequate plans are prepared in accordance with the Clinger-Cohen Act and OMB's criteria for FY 1998 information technology investments. In developing the plans, the Administrator should benchmark loan monitoring business processes and systems against comparable processes used by other organizations and, if appropriate, simplify or redesign work processes. |
Closed – Implemented
In December 1998, SBA completed benchmarking its business processes for loan management functions against similar organizations in government and private sectors. Based on the results of benchmarking, SBA initiated a business process reengineering (BPR) project, which it completed in July 1999. In the BPR, SBA examined simplifying and redefining work processes. In its BPR, SBA projected benefits that apply to all of the reengineered functional areas (major business processes) for its lending programs. Financial benefits include more efficient use of funds, decreased costs, and greater recoveries. In its May 2000 benefit-cost analysis for the reengineered loan monitoring system, SBA projected a 56 percent internal rate of return between FY 1998 and FY2006, with a payback by the beginning of FY2004. SBA projected a net present value of $80 million in savings using a discount rate of 10 percent. Other benefits identified in the BPR include improved information accuracy and timeliness, increased resource utilization, greater participation in SBA programs, more consistent policy application, and enhanced ability to quantify lender performance.
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| Small Business Administration | For the proposed loan monitoring system, the Administrator, SBA, should not proceed with funding the system development until adequate plans are prepared in accordance with the Clinger-Cohen Act and OMB's criteria for FY 1998 information technology investments. In developing the plans, the Administrator should analyze the benefits and costs of the alternatives and use these to demonstrate that the project will have a positive return-on-investment. |
Closed – Implemented
In FY 2000, SBA analyzed the benefits and costs of the alternatives to demonstrate a positive return on investment for its project to produce a loan monitoring system. SBA plans to periodically update these analyses as the project moves forward.
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| Small Business Administration | For the proposed loan monitoring system, the Administrator, SBA, should not proceed with funding the system development until adequate plans are prepared in accordance with the Clinger-Cohen Act and OMB's criteria for FY 1998 information technology investments. In developing the plans, the Administrator should ensure that the proposed information system is consistent with the agency's information architecture. |
Closed – Implemented
In March 2000, SBA finalized its ITA with the inclusion of rules and standards for interoperability and maintainability. In its May 2000, LMS Project Plan SBA stipulates that the development of LMS must proceed and remain compliant with the ITA. By developing the LMS in compliance with the ITA, SBA should improve interoperability and maintainability between the LMS and other SBA systems developed using the ITA.
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Topics
Data integrityDatabasesLoan accounting systemsReporting requirementsRisk managementSmall business loansStrategic information systems planningSystems designSmall businessDatabase management systems