Finding Text
Small Business Administration Financial Assistance Listing #59.008
COVID‐19 Disaster Assistance Loans
Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Material Weakness in Internal Control over Compliance
Criteria: 2 CFR 200.303(a) establishes 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: The Organization did not retain the required documentation to support the review of
all expenditures. We were unable to view documentation of the review of 13 out of 60
transactions tested. One out of 60 transactions did not match supporting documents, however
amount was undercharged to the program as a result.
Cause: The Organization had turnover and limited staffing available.
Effect: Lack of approval can result in expenditures that are otherwise not an allowable cost or
allowable activity.
Questioned Costs: None reported
Context/Sampling: A nonstatistical sample of 60 transactions out of 3,425 total transactions
were selected for testing, which accounted for $79,149 of $1,401,500 of federal program
expenditures.
Repeat Finding from Prior Year(s): Yes
Recommendation: We recommend the Organization’s management implement a process that
allows for proper approval of expenditures to ensure that expenditures are for allowable
activities and costs.
Views of Responsible Officials: Management agrees with the finding.