Finding Text
Shuttered Venue Operators Grant Program – 59.075
Grant Agreement No.: SBAHQ21SV012760
U.S. Small Business Administration
Reference Number
2021-001 – Delays in Financial Reporting
Evaluation of Finding
Material Weakness and Noncompliance
Criteria
Management is responsible for providing timely and accurate financial information. Because the 22nd DAA has expended over $750,000 in federal awards, Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), requires non-federal entities to submit their financial statements and single audit reports to the Federal Audit Clearinghouse (FAC) within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period.
Condition
The 22nd DAA did not submit its financial statements and single audit reports to the FAC within the required timeframe for the fiscal year ended December 31, 2021. The financial statements and single audit reports were submitted after the deadline of September 30, 2022.
Cause of Condition
Delays in preparing the schedule of expenditures of federal awards and preparation for the single audit report were caused by unfamiliarity with federal grant reporting requirements.
Effect or Potential Effect of Condition
The late submission of the financial statements and single audit reports impairs the ability of the federal awarding agencies and pass-through entities to monitor the 22nd DAA’s compliance with federal requirements and to make informed decisions regarding the continuation or modification of federal awards. The late submission also results in noncompliance with the Uniform Guidance, and increases the risk of fraud, waste, and abuse of federal funds.
Questioned Costs
None noted.
Context
The 22nd DAA’s financial statements and single audit reports are used by the federal awarding agencies and pass-through entities to assess the non-federal entity's financial condition, internal controls, and compliance with federal requirements.
Repeat Finding
No.
Recommendation
We recommend the 22nd DAA implement a tracking system for federal awards to allow for reconciliation to be performed on a continuous basis throughout the year. This will better allow the 22nd DAA to identify the need for a single audit timely, and ensure reporting requirements are met.
Views of responsible officials
Management concurs generally and will consult with subject-matter experts, including certified accountants and legal counsel, to ensure a system of proper filing and compliance for any future federal awards.
The 22nd DAA does not typically receive federal grants; The SVOG grant was an extraordinary short-term program created during the COVID-19 pandemic, when mass gatherings - the foundation of the 22nd DAA’s business as a major events venue - were banned and severely restricted by law. During the grant period, and due in large part to the global financial crisis, the 22nd DAA experienced a high volume of turnover of its accounting and human resources staff. As these were the departments primarily responsible for record-keeping for the grant, the audit was not completed in a timely manner.
Since then, management has worked diligently to fill these positions. The 22nd DAA will prioritize record-keeping systems and training for timely reporting for any future federal grant awards.