Finding 519155 (2021-002)

Shuttered Venue Operators Grant Program – 59.075 Grant Agreement No.: SBAHQ21SV012760 U.S. Small Business Administration Reference Number 2021-002 – Incomplete Schedule of Expenditures of Federal Awards Evaluation of Finding Material Weakness and Noncompliance Criteria Uniform Guidance regulations, section 200.303 Internal Controls, requires recipients of federal awards to establish, document, and maintain effective internal control over the federal awards received to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. This requirement includes the required preparation of a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) per section 200.510(b) Schedule of Expenditures of Federal Awards. Condition During our audit of the SEFA for the fiscal year ending December 31, 2021, we identified that the schedule was incomplete. Specifically, the total expenditures reported did not match the supporting documentation provided. Cause of Condition The primary cause of this finding appears to be a lack of familiarity with the required preparation and review of the SEFA. There was insufficient coordination between the departments responsible for managing federal awards and the accounting department responsible for preparing the SEFA. Effect or Potential Effect of Condition The incomplete SEFA can lead to inadequate reporting of 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 None noted. Context This finding was noted during the review of the SEFA and the supporting documentation. The discrepancies were observed in the one federal programs, affecting the overall accuracy and completeness of the SEFA. Repeat Finding No. Recommendation We recommend that the 22nd DAA establish and implement enhanced internal controls over the preparation of the SEFA. This should include: • Regular training for staff involved in federal awards management and SEFA preparation. • Periodic reconciliations of federal expenditures to ensure all awards are accounted for. • A thorough review process to detect and correct any omissions or discrepancies before finalizing the SEFA. Views of responsible officials Management concurs with the finding and has initiated steps to educate and improve its understanding of the steps required for the preparation of the SEFA. These steps include training sessions for relevant staff, a revised reconciliation process, consultations with subject-matter experts including CPAs and attorneys and an enhanced review protocol.