Small Business Development Centers, Business Resources Division, Department of Commerce : performance audit PDF
Preview Small Business Development Centers, Business Resources Division, Department of Commerce : performance audit
T 354.2799 L72SBDC 2006 Legislative Audit Division StateofMontana ReporttotheLegislature Performance Audit January2006 STATE DOCUMENTS COLLECTION MAR 1 ^ 2006 HELENA, MONTANA 59620 Small Business Development Centers BusinessResourcesDivision DepartmentofCommerce Thisreportprovidesfindingsandrecommendationsdevelopedasaresult ofaperformanceauditoftheSmallBusinessDevelopmentCenters program. Findingsandrecommendationsaddress: ProvisionofSBDCservicesandalternativeserviceproviders. Compliancewithfederalregulations. Trendsinprogramcounselingandtrainingactivities. ProgramservicesforveteransandAmericanIndians. Economictrendsandprogramserviceareas. Programoutputsandoutcomesreporting. Directcomments/inquiriesto: LegislativeAuditDivision Room 160,StateCapitol POBox201705 MT 05P-04 Helena 59620-1705 Helpeliminatefraud,waste,andabuseinstategovernment. CalltheFraudHotlineat 1-800-222-4446statewideor444-4446inHelena. MontanaStateLibrary 3 0864 1003 6715 3 PERFORMANCEAUDITS Performance audits conducted by the Legislative Audit Division are designed to assess state governmentoperations. Fromtheauditwork,adeterminationismadeastowhetheragenciesand programs are accompUshingtheir purposes, and whether they can do so with greater efficiency and economy. The audit workis conducted in accordance with audit standards set forthby the UnitedStatesGovernmentAccountabihtyOffice. Members of the performance audit staff hold degrees in disciplines appropriate to the audit process. Areas ofexpertise include business and public administration, mathematics, statistics, economics,politicalscience,criminaljustice,computerscience,education,andbiology. Performance audits areperformed at the request ofthe Legislative Audit Committee, whichis a bicameralandbipartisanstandingcommitteeoftheMontanaLegislature. Thecommitteeconsists ofsixmembersoftheSenateandsixmembersoftheHouseofRepresentatives. MEMBERSOFTHELEGISLATIVEAUDITCOMMITTEE LEGISLATIVEAUDIT DIVISION ScottA. Seacat,LegislativeAuditor DeputyLegislativeAuditors: JohnW.Northey,LegalCounsel JimPellegrini,PerlbrmanceAudit ToriHunthausen,ISAudit&Operations JamesGillett,Financial-ComplianceAudit January2006 TheLegislativeAuditCommittee oftheMontanaStateLegislature: ThisisourperformanceauditofSmallBusinessDevelopmentCenters(SBDC),aprogram administeredbytheDepartmentofCommerce. Thisreportincludesinformationoncontinuing publicprovisionofSBDCservices,availabilityofalternativeserviceproviders,program administrationandcompliancewithfederalregulations,programactivityandserviceprovision trends,analysisofeconomictrendsinprogramserviceareas,andprogramoutcomesreporting. A writtenresponsefromtheDepartmentofCommerceisincludedattheendofthereport. WewishtoexpressourappreciationtoSBDCcounselorsandDepartmentofCommercestafffor theircooperationandassistanceduringtheaudit. Resoectfullysubmitt 5C0ttA. Seacat LegislativeAuditor Room 160.StateCapitolBuildingPOBox201705Helena,MT 59620-1705 Phone(406)444-3122 FAX(406)444-9784 [email protected] Legislative Audit Division Performance Audit Small Business Development Centers Business ResourcesDivision DepartmentofCommerce MembersoftheauditstaffinvolvedinthisauditwereLisaBlanfordand AngusK.Maciver. Digitized by the Internet Archive in 2010 with funding from IVIontana State Library http://www.archive.org/details/smallbusinessdev2006mont 8111 Table ofContents ListofFiguresandTables iv AppointedandAdministrativeOfficials v GlossaryofSummary vi ReportSummary S-1 ChapterI-Introduction&Background 1 Introduction 1 AuditObjectives 1 AuditApproach 2 BackgroundInformation 2 StatutoryReferences 3 SBDCNetworkStructure 4 SBDCAdvisoryBoard 5 SBDCCounselingandTrainingActivities 6 Federal SBDCAdministration 6 ProgramFunding 7 ReportOrganization 9 ChapterII-EvaluationofSBDCServiceProvision 11 Introduction 1 ComparisonGroupStudyofSBDCEconomicImpact 1 ComparisonGroupDesign 1 TrendsinReportedTaxableIncome 12 TrendsinReportedEmploymentData 13 TrendsforPopulationSub-Sectors 15 SBDCBusinessBenefitfromEnhancedProductivity 16 SBDCProgramMeetsItsPrimaryObjective 16 SBDC ServiceProvision 17 ProgramProvidesBasicBusinessPlanningAssistance 1 PrivateSectorServiceProviders 19 CalculatingtheCostofPrivateServices 19 PrivateSectorServicesAreAvailable,ButCostly 20 OtherServiceProviders 20 LocationsofPublicSectorProviders 23 OverlapExistsAmongServiceProviders 25 OverallConclusion 26 SBDCProgramCouldImproveOperationalEfficiencyand Effectiveness 26 ChapterIII-ProgramCompliance& Administration 27 Introduction 27 FederalAdministrative&ComplianceStandards 27 ProgramMeetsFederalComplianceStandards 27 ProgramOversightProcedures 28 ContractualRelationshipBetweenLeadandSub-Centers 28 LeadCenterMeetsFederalComplianceandOversight Standards 29 Pagei Table ofContents LeadCenterMeetsFederalComplianceandOversight Standards 29 SBABusinessSizeRegulations 29 TrendsinClientBusinessTypes 29 SomeBusinessesExceedSizeRegulations 30 SBDCOver-ReportedSomeClientData 30 ProgramManagersNeedtoImproveOversightofClient Records 31 ComparisonwithOtherStates 32 UniversitySystemAdministrationofSBDCPrograms 32 NetworkStructuresinWesternStates 32 FederalandStateFundingofSBDC 34 OverallConclusion 35 ChapterIV-Counseling&TrainingActivities 37 Introduction 37 DataAnalysisDefinitionsandParameters 37 Sub-CenterDocumentationProcedures 37 Counseling&TrainingActivitiesareDocumentedCorrectly 37 CounselingandTrainingActivityTrends 38 NumberofClientsCounseledisDecreasing 39 TrainingEventsandAttendanceareIncreasing 39 ProgramUsesTrainingtoScreenParticipants 39 AnalysisofTrainingEventLocations 40 ProgramShouldAddressAvailabilityofTraininginSome Locations 40 ClientDemographicTrends 41 Special EmphasisGroups 41 TrendsinVeteranParticipation 41 ProgramShouldConductFurtherAnalysisofVeteran Participation 43 AmericanIndianParticipation 43 ReservationTrainingActivities 44 IndianEconomicDevelopment Initiatives 45 SBDCProgramShouldAddressReservationActivities 45 OverallConclusion 46 ChapterV-EconomicTrends& SBDCServiceAreas 47 Introduction 47 SBDCClient Locations 47 SBDC ServesaPredominatelyUrbanClientele 48 SmallBusinessActivityinSBDC ServiceAreas 49 AnalysisofCountyEconomicGrowthTrends 49 TrendsinSBDCClientActivities 50 ObservedTrendsinSub-CenterPerformance 51 SeveralFactorsCouldAffect Sub-CenterWorkload 52 ProgramShouldAddressResourceAllocation 53 EffectsofSomeProgrammaticTrendsareUncertain 53 Pageii Table ofContents ClientActivityTrendsNotCommensurateWithPrevailing EconomicConditions 54 InterventionRequiredtoCorrectResourceAllocation 54 OverallConclusion 55 ChapterVI-ProgramOutcomesReporting 57 Introduction 57 ProgramOutputsandPerformanceGoals 57 AnalysisofSBDCOutputsPerformanceTargets 57 AdjustmentsinPerformanceTargetsareNecessary 59 VerifyingSBDCOutcomesandEconomicImpact 59 ProgramApproachtoOutcomesReportingisConservative 59 OutcomesDataCannotbeIndependentlyVerified 60 ExistingEconomicImpactStudiesRelyonSelf-Reported Data 60 SBDCProgramOutcomesReporting 61 ReportedOutcomesDataandTrends 61 ReportedOutcomesinOtherStates 63 ImprovementsinPerformanceMeasurementSystemNeeded 64 OverallConclusion 65 AppendixA-AuditApproach A-1 Audit Scope A-1 AuditMethodologies A-1 AuditPlanning A-1 SBDCServiceProvision A-2 AlternativeServiceProviders A-2 AdministrativeComplianceandOversight A-3 SBDCCounselingandTrainingActivities A-4 EconomicTrendsinProgramServiceAreas A-4 ProgramOutputsandOutcomesReporting A-5 DepartmentResponse B-1 DepartmentofCommerce B-3 List ofFigures and Tables Figures Figure 1 MontanaSBDCRegionalNetwork 4 Figure2 ReportOrganization 10 Figure3 MedianTaxableBusinessIncomeforComparisonGroups 13 Figure4 MedianAnnual PayrollperEmployeeforComparison Groups 15 Figure5 46MontanaCommunitiesWithBusinessTechnical AssistanceResources 24 Figure6 SBDCClientsCounseledandAverageHoursperClient 38 Figure7 DensityDistributionofSBDCClients 48 Figure8 GrowthinBusinessEstablishmentsbySBDC ServiceArea 50 Figure9 MedianAnnualVarianceinSub-CenterClientActivity PerformanceLevel 51 Figure 10 TrendsforSelectedOutputPerformanceMeasures 58 Figure 11 TrendsinReportedOutcomesData 62 Figure 12 SelectedOutcomesData forOtherSources 63 TABLES Table 1 BasicManagement kiformationforSBDC 3 Table2 SBDCFundingSourcesandAmounts 8 Table3 LeadCenterandSub-CenterBudgets 9 Table4 TypeofCounselingServicesProvided 19 Table5 SBDCNetworkStructuresinMontanaandOtherWestern States 33 Table6 StateandNon-GovernmentalFundingofSBDCPrograms 34 Table7 VeteranParticipationBySBDCSub-Center 42 Table8 SBDCTrainingEventsonIndianReservations 44 Pageiv
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