Overview
In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of certain activities of the Massachusetts Office of International Trade and Investment (MOITI) for the period September 30, 2018 through June 30, 2021. When examining MOITI’s requirements for graduating small businesses from the State Trade Expansion Program (STEP), we extended the audit period back through May 1, 2012, the date MOITI issued its first financial assistance award as part of STEP.
We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
Below is a list of our audit objectives, indicating each question we intended our audit to answer; the conclusion we reached regarding each objective; and, if applicable, where each objective is discussed in the audit findings.
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Objective |
Conclusion |
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No; see Finding 1 |
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No; see Finding 2 |
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Yes |
To achieve our audit objectives, we gained an understanding of MOITI’s internal control environment related to the objectives by reviewing applicable policies and procedures and interviewing officials at MOITI, the Executive Office of Housing and Economic Development (EOHED), and the Massachusetts Export Center (MEC). We evaluated the design, and tested the operating effectiveness, of internal controls related to STEP financial assistance awards MOITI gave to small businesses.
To obtain sufficient, appropriate audit evidence to address our audit objectives, we conducted further audit testing as follows.
- To determine whether MOITI collected information about the four USBCs discussed in STEP Funding Opportunity Announcement OIT-STEP-2018-01, we obtained the Performance Progress Report (PPR) that MOITI sent to SBA for the quarterly reporting period ended June 30, 2021. During the audit period, MOITI gave STEP financial assistance awards to 48 small businesses. We inspected the completed Requests for Counseling (RFCs) for these 48 businesses to determine whether the USBCs to which they reported belonging matched the PPR that MOITI sent to SBA. Using contact information on RFCs and/or Massachusetts STEP Program Readiness Assessment and Application forms, we conducted inquiries with officials from the 48 small businesses to verify that the USBCs to which they reported belonging on the RFCs were accurate.
- To determine whether MOITI had implemented requirements for graduating small businesses from STEP as encouraged by STEP Funding Opportunity Announcement OIT-STEP-2018-01, we interviewed officials at MOITI, EOHED, and MEC. We obtained a report of all financial assistance awards MOITI had given to small businesses since STEP’s inception from the Massachusetts Management Accounting and Reporting System (MMARS). We conducted analytical procedures on the data in MMARS to determine how many different small businesses received STEP financial assistance awards. We summarized the data to identify the number of small businesses that received awards and the amount of each award. We also determined whether each small business was new or had received an award before.
- To determine whether the financial assistance awards MOITI gave to small businesses were only for allowable activities, whether the activities were supported by adequate documentation, and whether the award recipients provided the required cash matches, we obtained a report of all awards MOITI gave to small businesses during the audit period from MMARS. We selected a random, nonstatistical sample of 20 of 48 payments for testing. For our sample, we inspected each small business’s completed Massachusetts STEP Program Reimbursement Form and supporting documentation (such as paid invoices, receipts, bank statements, and tradeshow conference badges) to determine the following:
- whether each reimbursement was for an allowable STEP activity
- whether the dates of each activity were during the STEP performance period
- whether small businesses gave MOITI adequate documentation to support each activity
- whether the amount paid by each small business, according to the supporting documentation, equaled or exceeded the amount of the required business cash match.
Where nonstatistical sampling was used, we could not project the results of our testing to the overall populations.
Data Reliability
OSA performed data reliability assessments for MMARS in 2014 and 2018. These assessments focused on reviewing selected system controls, including access, security awareness, audit and accountability, configuration management, identification and authentication, and personnel security.
As part of the current audit, we tested security management controls, such as personnel screening and security awareness training, at MOITI during the audit period. We obtained a report of all financial assistance awards MOITI gave to small businesses during the audit period from MMARS. To confirm the completeness and accuracy of the data, we traced a sample of expenditures from the data to original source documents (such as STEP Program Readiness Assessment and Application forms, STEP application scoring sheets, STEP award letters, and STEP contracts) and traced a sample of original source documents back to the MMARS data. Further, we matched totals of reimbursements made to small businesses from the MMARS data to the PPRs MOITI submitted to SBA and determined whether they were accurate.
Based on these data reliability assessment procedures, we determined that the data obtained for our audit period were sufficiently reliable for the purposes of our audit work.
| Date published: | June 30, 2022 |
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