Finding 390470 (2023-003)

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.