SVOG Audit Requirements: SBA Provides Updated Guidance

SBA Clarifies Audit Requirements for Shuttered Venue Operators Grants

On February 16, 2022, the Small Business Administration released additional information for Shuttered Venue Operators Grant (“SVOG”) recipients:

This additional information further clarifies the audit requirements for SVOG recipients. The audit requirement is different for non-profit entities (referred to as non-Federal entities) and for-profit entities. It is important to note the difference and for recipients to plan accordingly based on their entity’s requirements.

General Audit Items

  • If an entity “expends” more than $750,000 in Federal funds (across all Federal sources, including SVOG funds BUT excluding PPP) within its fiscal year, it will be required to complete a third-party audit. Those who expend less than $750,000 in Federal funds within a fiscal year do not have an audit requirement. Entities cannot do one audit for the entire grant period but must follow the guidelines based on grant amounts expended in the entity’s fiscal year.
  • “Expend” is defined as the sum of actual expenses incurred within the entity’s own fiscal year, not the amount of grant received or cash disbursed.
  • In the fiscal year the award is granted, the entity includes eligible expenditures incurred from the beginning of the eligible grant period, March 1, 2020, through the end of the fiscal year to determine the amount “expended”.
  • The amount expended in a fiscal year equals the revenue recorded under the award in that same fiscal year.
  • The Audit Report should be completed and submitted to SBA within 9 months of the end of the Grantee’s fiscal year in which $750,000 or more of Federal funds have been expended.
  • SBA will utilize an Audit Reporting Action Item to collect audit report packages from non-profit and for-profit entities.

Non-profit Entities

  • Non-profit entities must complete an audit in line with the requirements outlined in the Uniform Guidance Subpart F (2 CFR 200. 500 – 521), which requires a single audit or program-specific audit.
  • An entity can only do a program-specific audit if the SVOG grant is the only source of Federal funding (this would exclude PPP funds as these were specifically identified as not being subject to Uniform Guidance requirements).
  • Federal funds received from other sources, such as the National Endowment for the Arts or from receipt of Economic Injury Disaster Loans (even if repaid during the fiscal year), would need to be considered when computing the total federal awards in any one fiscal year.

For-profit Entities

  • For-profit entities can complete one of the following to meet the auditing requirement:
  1. Single audit or program-specific audit consistent with Uniform Guidance Subpart F (2 CFR 200. 500 – 521); OR
  2. An audit of the entity’s financial statements.
    • For-profit entities that are audited:
    • These entities will no longer need an additional audit under government auditing standards to meet the grant requirements. They will simply submit their audited financial statements with the grant.
  • For-profit entities that are not audited:
  • These entities can choose to have a program-specific audit, if the SVOG grant is the only source of Federal funding (not including PPP), which would only require audit procedures to be done around compliance with the SVOG grant.
  • If the for-profit entity has more than one Federal funding source (not including PPP), they will have to have either a full financial statement audit or Single audit, which also includes audit procedures over the entity’s entire financial statements.

The SBA has stated that they are continuing to work on a compliance supplement for the SVOG, which will act as the framework for the single audit or program-specific audit.

With the above clarifications from the SBA, entities who have received SVOG should evaluate the audit needs of their grant and begin seeking the assistance of an independent third-party accountant. Withum has been following the SVOG program closely since its infancy and has expertise in all of the above audit types.

Get in Touch

For more information, please reach out to Withum’s Theatre, Entertainment and the Arts team.