Finding Text
2020-002 – Allowable Costs & Period of Performance
Material Weakness in Internal Controls Over Compliance and Instances of Noncompliance
Assistance Listing Number: 59.046
Federal Agency/Pass-through Entity - Program Name: Small Business Administration - Microloan Program
Award Number(s): SBAHQ19Y0115 & SBAOCAML200065-01-00
Award Year(s): 2019 & 2020
Criteria or specific requirement: The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
2 CFR Section 200.403(g) states that for costs to be allowed under Federal awards, they must be adequately documented and there must be sufficient documentation.
Lastly, according to 2 CFR 200.1, Period of Performance is defined as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods.
Condition: The Organization was unable to provide underlying details and/or related documentation for $5,981 in expenditures reported under the Microloan Program to support the allowability or period of performance.
Questioned Costs: $5,981
Context: During our audit procedures, we were unable to obtain general ledger detail or supporting documentation for $962 for Award #SBAOCAML200065-01-00 and $4,878 for Award #SBAHQ19Y0115 to substantiate total program non-payroll expenditures or period of performance. Additionally, during testing, three (3) out of 15 non-payroll disbursements, totaling $141, did not have supporting documentation.
Cause: The Organization did not have internal controls in place to ensure adequate documentation and records retention to ensure compliance with grant requirements.
Effect or potential effect: The Organization is out of compliance with 2 CFR Section 200.403(g) and the awards' periods of performance.
Repeat Finding: No
Recommendation: The Organization should implement controls to ensure accurate recordkeeping and document retention to substantiate expenditures allocated to grants.
Views of responsible officials: The Organization agrees with the finding and has implemented controls to ensure accurate recordkeeping, and to ensure that documents are retained to substantiate all expenditures allocated to grants. For additional information, see the Organization’s separate report for planned corrective actions.