Finding Text
Shuttered Venue Operators Grant Program – 59.075
Grant Agreement No.: SBAHQ21SV012760
U.S. Small Business Administration
Reference Number
2021-003 – Missing Supporting Documentation for Expenditures
Evaluation of Finding
Significant deficiency and Noncompliance
Criteria
Section 200.302, Financial Management, of the Uniform Guidance, states there must be documentation sufficient to track expenditure and establish that funds have been used in accordance with federal statutes, regulations, and the terms and conditions of the federal awards.
Condition
The 22nd DAA was unable to provide adequate support for some non-payroll (3 out of 25 transactions) and payroll items (8 out of 60 transactions).
Cause of Condition
The primary cause of this finding appears to be missing supporting evidence of expenditures and/or not retaining supporting evidence.
Effect or Potential Effect of Condition
The missing supporting evidence can lead to inaccurate expenditures getting recorded for federal expenditures, which may result in non-compliance with federal regulations. This can further lead to potential questioned costs and the risk of federal funds being reclaimed by the grantor agencies.
Questioned Costs
Potential questioned costs of $102,377.
Context
The documentation provided to support substantive testing did not contain adequate information for some of the expenditures tested during the single audit to allow verification of compliance.
Repeat Finding
No.
Recommendation
We recommend that the 22nd DAA verify that all transactions recorded are supported by underlying evidence and this evidence is retained for the appropriate timeframe to allow for verification of compliance activities.
Views of responsible officials
Management concurs with the finding and has initiated steps to improve the internal controls over the preparation of the SEFA. These steps include diligent hiring, training sessions for relevant staff, a revised reconciliation process, adopting a new and improved accounting and human resources electronic system, enhancing electronic documentation and record-keeping processes, and creating an enhanced review protocol.