Audit 301253

Small Business Administration Financial Assistance Listing #59.008 COVID‐19 Disaster Assistance Loans Activities Allowed or Unallowed and Allowable Costs/Cost Principles Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the Organization is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: The Organization did not retain the required documentation to support the review of all expenditures. We were unable to view documentation of the review of 13 out of 60 transactions tested. One out of 60 transactions did not match supporting documents, however amount was undercharged to the program as a result. Cause: The Organization had turnover and limited staffing available. Effect: Lack of approval can result in expenditures that are otherwise not an allowable cost or allowable activity. Questioned Costs: None reported Context/Sampling: A nonstatistical sample of 60 transactions out of 3,425 total transactions were selected for testing, which accounted for $79,149 of $1,401,500 of federal program expenditures. Repeat Finding from Prior Year(s): Yes Recommendation: We recommend the Organization’s management implement a process that allows for proper approval of expenditures to ensure that expenditures are for allowable activities and costs. Views of Responsible Officials: Management agrees with the finding.

Small Business Administration Financial Assistance Listing #59.008 COVID‐19 Disaster Assistance Loans Preparation of Schedule of Expenditures of Federal Awards Material Weakness in Internal Control over Compliance – Other Criteria: Proper controls over financial reporting include the ability to prepare the schedule of expenditures of federal awards (schedule) and accompanying notes to the schedule. Condition: The Organization does not have an internal control system designed to provide for the preparation of the schedule. There was no documentation of review of the schedule retained and the schedule required adjustments. Cause: The Organization had turnover and limited staffing available. Effect: There is a reasonable possibility that the Organization would not be able to draft the schedule that is correct without the assistance of auditors. Questioned Costs: None reported Context/Sampling: Sampling was not used. Repeat Finding from Prior Year(s): Yes Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, we recommend management be aware of the financial reporting requirements relating to the Organization’s schedule of expenditures of federal awards and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

Small Business Administration Financial Assistance Listing #59.008 COVID‐19 Disaster Assistance Loans Procurement Material Noncompliance and Material Weakness in Internal Control over Compliance Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and 2 CFR sections 200.318 through 200.326 set forth the procurement standards non‐federal entities other than states must follow when operating federal programs and the procurement procedures required depending on the amount of the transaction. The Organization is required to create a written procurement, suspension, and debarment policy that complies with applicable federal requirements and to follow this policy when procuring goods and services. The Organization is also required to retain documentation supporting performance of a price analysis, open competition, and review for suspension and debarment. Condition: The Organization does not have a written procurement policy. Additionally, there was no documentation to support a price analysis over the transactions tested or documentation supporting that vendors were reviewed for suspension and debarment. There was also no documentation for review of the procurement transactions tested. Cause: The Organization had turnover and limited staffing available. Effect: The Organization did not ensure that the procurement policy was complete and accurate. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 4 transactions out of 9 procurement transactions were selected for testing, which accounted for $156,353 of $297,188 of federal program expenditures. Repeat Finding from Prior Year(s): No Recommendation: We recommend the Organization’s management implement a written procurement policy to follow and documenting the performance of required procurement procedures. Views of Responsible Officials: Management agrees with the finding.

Small Business Administration Financial Assistance Listing #59.008 COVID‐19 Disaster Assistance Loans Activities Allowed or Unallowed and Allowable Costs/Cost Principles Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the Organization is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: The Organization did not retain the required documentation to support the review of all expenditures. We were unable to view documentation of the review of 13 out of 60 transactions tested. One out of 60 transactions did not match supporting documents, however amount was undercharged to the program as a result. Cause: The Organization had turnover and limited staffing available. Effect: Lack of approval can result in expenditures that are otherwise not an allowable cost or allowable activity. Questioned Costs: None reported Context/Sampling: A nonstatistical sample of 60 transactions out of 3,425 total transactions were selected for testing, which accounted for $79,149 of $1,401,500 of federal program expenditures. Repeat Finding from Prior Year(s): Yes Recommendation: We recommend the Organization’s management implement a process that allows for proper approval of expenditures to ensure that expenditures are for allowable activities and costs. Views of Responsible Officials: Management agrees with the finding.

Small Business Administration Financial Assistance Listing #59.008 COVID‐19 Disaster Assistance Loans Preparation of Schedule of Expenditures of Federal Awards Material Weakness in Internal Control over Compliance – Other Criteria: Proper controls over financial reporting include the ability to prepare the schedule of expenditures of federal awards (schedule) and accompanying notes to the schedule. Condition: The Organization does not have an internal control system designed to provide for the preparation of the schedule. There was no documentation of review of the schedule retained and the schedule required adjustments. Cause: The Organization had turnover and limited staffing available. Effect: There is a reasonable possibility that the Organization would not be able to draft the schedule that is correct without the assistance of auditors. Questioned Costs: None reported Context/Sampling: Sampling was not used. Repeat Finding from Prior Year(s): Yes Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, we recommend management be aware of the financial reporting requirements relating to the Organization’s schedule of expenditures of federal awards and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

Small Business Administration Financial Assistance Listing #59.008 COVID‐19 Disaster Assistance Loans Procurement Material Noncompliance and Material Weakness in Internal Control over Compliance Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and 2 CFR sections 200.318 through 200.326 set forth the procurement standards non‐federal entities other than states must follow when operating federal programs and the procurement procedures required depending on the amount of the transaction. The Organization is required to create a written procurement, suspension, and debarment policy that complies with applicable federal requirements and to follow this policy when procuring goods and services. The Organization is also required to retain documentation supporting performance of a price analysis, open competition, and review for suspension and debarment. Condition: The Organization does not have a written procurement policy. Additionally, there was no documentation to support a price analysis over the transactions tested or documentation supporting that vendors were reviewed for suspension and debarment. There was also no documentation for review of the procurement transactions tested. Cause: The Organization had turnover and limited staffing available. Effect: The Organization did not ensure that the procurement policy was complete and accurate. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 4 transactions out of 9 procurement transactions were selected for testing, which accounted for $156,353 of $297,188 of federal program expenditures. Repeat Finding from Prior Year(s): No Recommendation: We recommend the Organization’s management implement a written procurement policy to follow and documenting the performance of required procurement procedures. Views of Responsible Officials: Management agrees with the finding.