BOSTON — Today the Office of State Auditor Suzanne M. Bump released an audit of the Massachusetts Office of International Trade and Investment (MOITI), which found that MOITI’s process for collecting and recording small business information in underserved small business communities (USBCs) that apply for the State Trading Expansion Program (STEP) is ineffective. In addition, the audit revealed that MOITI has not implemented the requirements for small business exit from STEP.
“Our audit found that MOITI does not effectively collect information about whether small businesses applying for STEP financial aid scholarships are among the four USBCs defined by the federal Small Business Administration (SBA). Instead of collecting this information from all applicants, MOITI only attempts to collect this information from the small businesses that have received funding. As a result, MOITI cannot properly measure its impact on supporting underserved small businesses,” said State Auditor Suzanne M. Bump. “After the COVID-19 pandemic, small businesses in underserved communities need support more than ever. I am pleased to see that MOITI is taking steps to address this issue raised in our audit. »
Furthermore, the audit revealed that the MOITI does not collect complete information on the four USBCs. It allows companies to indicate that they are owned and controlled by women, but not if they are part of one of the other three USBCs. In addition, auditors noted that MOITI does not ensure that when it collects this information, it is correctly recorded in reports sent to the SBA.
The audit also identified that MOITI had not implemented the requirements for small business exit from STEP. Since STEP’s inception, 169 small businesses have received financial assistance grants from MOITI. The audit found that 41 (24%) of these small businesses had received awards for three or more years. Eight of these small companies received awards during the six years examined by the auditors; five companies have received awards over five years; six received awards in four of the years; and twenty-two received awards over the course of three years. The total amount of funding provided to each of these small businesses ranged from $18,473 to $62,500.
To improve these processes, the audit recommends that MOITI ensure that its employees are aware of STEP requirements and review the current information it has for companies that have received STEP financial support and correct any inaccuracies. In addition, MOITI should revise its Massachusetts STEP Program Readiness Assessment and Application to include the SBA’s definitions of the four USBCs and an area in which a small business must document any of the four USBCs to which it belongs. In addition, MOITI should implement monitoring controls to ensure that it accurately records the USBC statuses reported by the applicant in reports sent to SBA. The audit also advises MOITI to implement requirements for small business exit from STEP.
MOITI, established by Section 13K of Chapter 23A of the Massachusetts General Laws, is an agency overseen by the Executive Office of Housing and Economic Development (EOHED) and is part of the Massachusetts Marketing Partnership of EOHED. MOITI is administered by an Executive Director, who is appointed by the Governor.
STEP was originally created by the Small Business Jobs Act of 2010 as a three-year pilot program. It was later established as a permanent program administered by the federal government under the Trade Enforcement Act of 2015. STEP’s goal is to increase the number of small businesses that export and increase the value of exports by these companies. Through STEP, the SBA provides grants to state government organizations (such as MOITI), which then provide financial assistance to small businesses.