Finding Text
Small Business Administration Program Name: Shuttered Venue Operators Grant (SVOG) CFDA No(s) 59.075 Grant Number: SBAHQ21SV001236.2 Finding 2022-001 SIGNIFICANT DEFICIENCY Period of Performance Criteria: The Theatre should review contributions for donor restrictions and other recognition requirements, maintain a schedule of the restricted contributions and when conditions for recognition have been met. Condition: The Theatre reported the full Shuttered Venues Operators Grant (SVOG) when it was awarded, however, it was an expense reimbursement grant and therefore should not have been recognized as revenue until expenditure had been incurred. Context: When reviewing restricted net assets the auditor noted that the SVOG was recorded as a donor restricted net asset. Upon review of the award agreement it was determined that this award was for expense reimbursement and should only be recognized when appropriate expenses had been incurred. Cause: The Theatre was not aware of the different revenue recognition methods for pledges and expense reimbursement arrangements. Effect: Contributions and grant revenue was overstated in fiscal 2021 and understated in fiscal 2022 by $1,387,193. Recommendation: We recommend that the Theatre review ASU 2018-08, Not-for-Profit Entities (Topic 958) to understand the requirements related to the recognition of pledges and contributions. Questioned Costs: None Management?s Response: We agree with the finding. The Theatre will incorporate training on ASU 2018-08, Not-for-Profit Entities (Topic 958) related to revenue recognition of pledges and contributions for the appropriate personnel.