Finding 1089477 (2022-001)

Finding 2022-001 Documentation of Approval - Allowable Costs – Significant Deficiency in Internal Control over Compliance Agency Small Business Administration Assistance Listing Numbers (ALN) 59.075 – Shuttered Venue Operators Grant Program Criteria or Specific Requirement The cost principles in 2 CFR Part 200, Subpart E (Cost Principles) prescribe the requirements for cost accounting. In order for costs to be allowable under federal grants, they must be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the nonfederal entity and be adequately documented. Condition Documentation of invoice/timesheet approval was not retained for some items tested. Cause During the COVID-19 pandemic, some of the records of the Association were filed in two different locations. Once the offices were reopened, the process was not sufficiently designed to ensure every approved invoice was filed appropriately. Effect or Potential Effect Incorrect amounts could be charged to the program. Questioned Costs Not applicable. Context BDO selected 50 samples of nonpayroll costs and 44 payroll costs charged to the program. For 11 of the 50 nonpayroll samples, documentation of invoice approval was not retained, for a total of $5,616. The total nonpayroll amount tested was $197,609 of a total population of $1,419,455. For 5 out of the 44 payroll samples, documentation of timesheet approval was not retained, for a total of $7,677. The total payroll amount tested was $93,680 of a total population of $1,234,542. The selection method for both samples was nonstatistical and does not represent a statistically valid sample. BDO was able to review documentation to determine that cost was allowable and recorded properly. Identification as a Repeat Finding Not applicable, not a repeat finding. Recommendation The Association should ensure that original approval documentation is retained in the future. Views of Responsible Officials Management agrees with the finding and plans to retain invoice approval going forward.