Over the past few months, the SBA has provided several audit-specific webinars for entities that have received an SVOG grant. These webinars have provided details and clarity around the requirement.
The audit requirement is different for non-profit entities (referred to as non-Federal entities within 2 CFR 200) and for-profit entities. It is important to note the difference in the requirements between those entities and for recipients to plan accordingly based on their entity’s requirements.
General Audit Items
- If an entity “expends” $750,000 or more 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 separately 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 is equal to the revenue recorded under the award in that same fiscal year.
- The Audit Report should be completed and submitted to SBA within:
- Non-Federal Entities – 9 months after the end of the Grantee’s fiscal year in which $750,000 or more of Federal funds have been expended.
- For-profit Entities – 9 months after the release of the SVOG For-Profit Guidance Document (July 22, 2022) or 9 months after the end of the Grantee’s fiscal year in which $750,000 or more of Federal funds have been expended, whichever is later.
- SBA will utilize an Audit Reporting Action Item to collect audit report packages from non-Federal and for-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 National Endowment for the Arts or Economic Injury Disaster Loans (EIDL) (even if repaid during the fiscal year) would need to be considered when computing the total federal awards in any one fiscal year. Note: For non-profit entities, EIDL amounts are deemed to be expended when the loan funds are spent.
- For-profit entities can complete one of the following to meet the auditing requirement:
- Single audit or program-specific audit consistent with Uniform Guidance Subpart F (2 CFR 200. 500 – 521); OR
- an audit of the entity’s financial statements; OR
- a compliance examination performed under the AICPA’s SSAE [AT-C 315, Compliance Attestation] and GAGAS
- For-profit entities that are audited:
- These entities will not need an additional audit under Government Auditing Standards to meet the grant’s requirements. They will simply submit their audited financial statements to the SBA.
- 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 or EIDL (for for-profit entities only)), which would only require audit procedures to be performed over compliance with the SVOG grant.
- If the for-profit entity receives funding from more than one Federal agency (not including PPP or EIDL, but including federal grants passed through state agencies), they can choose to have either a compliance examination, financial statement audit or a Single audit.
With the above clarifications from the SBA, entities who have received SVOG should evaluate their grant’s audit needs and seek the assistance of an independent third-party accountant. Withum’s Theatre, Entertainment and the Arts Services team has been following the SVOG program closely since its infancy and has expertise in all of the above audit types.