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Government Accountability Office finds flaws in federal response to Covid-19
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CNBC's Kayla Tausche details the report card by the Governmental Accountability Office on the effectiveness of the CARES Act.
The speedy rollout of the Paycheck Protection Program put cash into the hands of business owners — and it may have also paved the way for fraud.
Those were the findings from a new report by the Government Accountability Office. The congressional watchdog released a 400-page report outlining its observations of the CARES Act and how the $2 trillion bill distributed emergency funding to Americans.
The Small Business Administration had processed $512 billion in 4.6 million guaranteed PPP loans as of June 12. The proceeds were designed to cover up to eight weeks of payroll expenses, utilities, mortgage interest and rent.
Borrowers, who now have 24 weeks to use the funding, are eligible for forgiveness if they use at least 60% of the proceeds on payroll costs. They may get partial forgiveness if they fall short of that amount.
“SBA’s PPP is the largest of these programs and one of the first to be implemented,” the GAO said in its report on Thursday.
“However, the limited safeguards and lack of timely and complete guidance and oversight planning have increased the likelihood that borrowers may misuse or improperly receive loan proceeds,” the watchdog wrote.
The GAO recommended that the SBA develop and implement plans to identify and respond to risks in the program to ensure its integrity, achieve effectiveness and address potential fraud.
“SBA neither agreed nor disagreed, but GAO believes implementation of its recommendation is essential,” the watchdog said.
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The speedy rollout of the Paycheck Protection Program put cash into the hands of business owners — and it may have also paved the way for fraud.
Those were the findings from a new report by the Government Accountability Office. The congressional watchdog released a 400-page report outlining its observations of the CARES Act and how the $2 trillion bill distributed emergency funding to Americans.
The Small Business Administration had processed $512 billion in 4.6 million guaranteed PPP loans as of June 12. The proceeds were designed to cover up to eight weeks of payroll expenses, utilities, mortgage interest and rent.
Borrowers, who now have 24 weeks to use the funding, are eligible for forgiveness if they use at least 60% of the proceeds on payroll costs. They may get partial forgiveness if they fall short of that amount.
“SBA’s PPP is the largest of these programs and one of the first to be implemented,” the GAO said in its report on Thursday.
“However, the limited safeguards and lack of timely and complete guidance and oversight planning have increased the likelihood that borrowers may misuse or improperly receive loan proceeds,” the watchdog wrote.
The GAO recommended that the SBA develop and implement plans to identify and respond to risks in the program to ensure its integrity, achieve effectiveness and address potential fraud.
“SBA neither agreed nor disagreed, but GAO believes implementation of its recommendation is essential,” the watchdog said.
For access to live and exclusive video from CNBC subscribe to CNBC PRO:
Turn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide.
Connect with CNBC News Online
#CNBC
#CNBC TV
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