Finding Text
Finding 2022-001 Federal Assistance Listing Number: 59.075 Program Name: COVID-19 Shuttered Venue Operators Grant Grantor Number: SBAHQ21SV003117.2 Grant Period: 3/1/2020 ? 6/30/2022 Federal Agency: Small Business Administration Type of Compliance Requirement: Period of Performance Type of Finding: Material Weakness; Noncompliance Criteria: Recipients that receive an initial and supplemental Shuttered Venue Operators Grant award are able to spend all award funds (both initial and supplemental phase awards) received over an 18-month period (defined in the most receipt Notice of Award, Box 5, as the Budget Period) after the initial phase award issuance date (defined in the most recent Notice of Award, Box 4, as the Project Period) for eligible and allowable costs incurred between March 1, 2020 and June 30, 2022 (Eligible Cost Period). In addition, Arden Theatre Company (the Theatre) is required to establish and maintain effective internal control over the federal awards that provides reasonable assurance that the Theatre is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition: The Theatre received both initial and supplemental awards thereby identifying its Eligible Cost Period as March 1, 2020 through June 30, 2022. The Theatre's identification of costs to be applied to its Shuttered Venue Operators Grant award included allowable costs recorded in the general ledger during the Eligible Cost Period. Of the population identified as eligible and allowable costs, 60 expenditures were selected and tested. Of the 60 selections tested, 4 selections resulted in an exception related to the Eligible Cost Period as the expenditure was incurred prior to March 1, 2020. Cause: The Theatre identified allowable costs with a general ledger posting date between March 1, 2020 and June 30, 2022. Some of the expenditures posted in 2020 were recorded based on the check issuance date (March 1, 2020 and later) and not based on the expense incurred date which was prior to March 1, 2020. The Theatre failed to properly review the supporting documentation of identified costs to ensure that the allowable costs were incurred within the Eligible Cost Period. Controls over the identification of the eligible and allowable costs were not properly designed and implemented. Effect: Allowable costs outside of the Eligible Cost Period were identified for use of the Shuttered Venue Operators Grant funds. Questioned Costs: None. Final closeout report has not been submitted as of the date of the auditors' report. Recommendation: We recommend that the Theatre design and implement controls over the identification of eligible and allowable costs to be applied to grant awards. In addition, we recommend that the Theatre review and revise the listing of eligible and allowable costs to be applied to its Shuttered Venue Operators Grant award, review all supporting documentation for those identified costs, and ensure that all identified costs were incurred within the Eligible Cost Period, prior to submitting its final closeout report. View of Responsible Officials: See corrective action plan on page 31.