Finding 6496 (2022-002)

FINDING - MAJOR FEDERAL AWARD In the current year, the auditor expressed an unmodified opinion on internal control over compliance for Ballet Hawaii’s major federal award program. However, a significant deficiency in internal control over compliance was reported by the auditor in the current year as described in Finding 2022-002. Finding 2022-002 U.S. Small Business Administration Federal Assistance Listing #59.075 Shuttered Venue Operators Grant Program Criteria – 2 CFR 200.303(a) provides that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the organization is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition – While Ballet Hawaii had established policies and procedures for the review and approval of expenditures, during the testing of federal award expenditures there were certain items that did not have documentation of such review and approval or were significantly delayed in being reviewed and approved. Ballet Hawaii did not retain the required documentation to support the review and approval of those respective expenditures. Cause – Ballet Hawaii had turnover in the executive director position in 2022 and 2023. Ballet Hawaii also had limited staffing available during the COVID-19 pandemic. The review and approval process was a collaborative process that sometimes took place orally without documentation or was significantly delayed in being reviewed, approved, and documented. Effect or Potential Effect – Lack of documented controls can result in expenditures that are not an allowable cost or allowable activity. Questioned Costs – None. Recommendation – We recommend Ballet Hawaii’s management implement a process that allows for documented approval of expenditures to ensure that such documentation is retained for such expenditures. Views of Responsible Officials and Planned Corrective Action – Refer to the corrective action plan.