The Shuttered Venue Operators Grant (SVOG) was provided by the Small Business Administration (SBA) to various arts and culture organizations that struggled with loss of revenue during the COVID-19 pandemic. In line with the federal Uniform Guidance requirements for grant recipients, entities that received over $750,000 in SVOG funding may be required to have additional compliance audits completed, such as a single audit, a program-specific audit, or a compliance examination. For many not-for-profit organizations, this may be the first time that they’ve received federal funding in excess of the $750,000 audit threshold; for-profit organizations may be receiving federal grant funding for the first time. It’s critical for recipients to understand what type of audit (if any) is required.
Reporting – What SVOG recipients need to know
Reporting requirements are different for for-profit vs. not-for-profit entities.
Final guidance on for-profit audit requirements from the SBA highlighted the following:
- The audit threshold is $750,000 or more of SVOG revenue recognized during the entity’s fiscal year.
- Audits are due by the later of 1) 9 months from the date the SBA’s For-Profit Guidance is released or 2) 9 months after the entity’s fiscal year-end. (The guidance was released July 22, 2022, so for 12/31/21 fiscal year-ends, audits will be due April 22, 2023.)
- For-profit entities may use one of four options to meet the audit requirements:
1. Single audit
2. Program-specific audit
3. An audit of the entity’s financial statements (does not need to be done under the Yellow Book requirements for government program audits)
4. A compliance examination attestation engagement
- The audit threshold is $750,000 or more of funds expended during the entity’s fiscal year.
- A single audit or a program-specific audit must be performed. A program-specific audit is allowed if the SVOG award is the only federal funding received. (This would not include Paycheck Protection Program (PPP) loans, which are excluded from the Uniform Guidance requirements.)
- Audits are due 9 months after the entity’s fiscal year end.
Ultimately, if you received SVOG funding, your auditors will be testing your organization’s compliance with the grant requirements.
How to prepare for your audit
- One of the first steps is to talk to your auditors regarding what reporting is required and what makes the most sense for your organization. You may need a single audit, a program-specific audit, or a compliance examination to be performed. If you don’t currently have a financial statement audit being performed, or if your auditors are not familiar with compliance audits or examinations of this nature, please feel free to reach out to CohnReznick to assist.
- The next step is to make sure that you have a well-documented listing of expenses that were funded by the SVOG award that 1) are equal to or exceed your SVOG award amount in total, 2) are allowable costs per the SVOG guidelines, and 3) are not expenses that were already funded by other federal funding (PPP awards, other federal grants, etc.). Your auditors will test a sample of these transactions, so make sure you have documentation to support these expenditures.
- In addition, make sure that your organization has documented internal control procedures.
For-profit recipients should review the final SBA guidance for more information.
The 2022 Compliance Supplement also includes information about the compliance requirements related to SVOG, and this is a good resource for what areas will be looked at and tested by your auditors.
CohnReznick has a team dedicated to performing these audits and examinations. Please contact our team if your organization has any questions or needs any assistance with this matter.
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