BEST PRACTICES FOR SVOG SINGLE AUDIT READINESS

Hard-hit small businesses received more than $16 billion in much-needed COVID-19 relief through the Small Business Administration’s (SBA) Shuttered Venue Operators Grant (SVOG) program. Many organizations that received this funding may not have experience with federal awards or the complex rules associated with them. Given that the SVOG program is a federal grant program, recipients will be subject to Single Audit requirements, which include compliance with the SVOG’s rules as well as general federal guidelines, regardless of their for-profit or nonprofit status.


The following best practices for administering SVOG funds can help make your organization audit-ready:

1. Thorough Documentation SBA requires recipients to obtain complete documentation for all expenses claimed and to retain records for at least three years post-closeout (four years for employment records). This can include receipts, invoices, payroll records, timesheets, contracts and more. Recipients may choose not to claim low-cost expenses where the documentation is harder to track down or will be difficult to maintain for the required years. For example, receipts may not have been kept for a $10 business lunch.


1. Thorough Documentation

SBA requires recipients to obtain complete documentation for all expenses claimed and to retain records for at least three years post-closeout (four years for employment records). This can include receipts, invoices, payroll records, timesheets, contracts and more. Recipients may choose not to claim low-cost expenses where the documentation is harder to track down or will be difficult to maintain for the required years. For example, receipts may not have been kept for a $10 business lunch.


2. Leverage Accounting System Capabilities

Recipients should set up the proper accounts and expense codes within their accounting system to reduce manual inputs and risk of error when tracking SVOG expenses. This will also make it easier to pull budgets versus actual reports, which are required upon closeout of the award.


3. Clear Allocation to Funding Sources

If your organization received Payroll Protection Program (PPP) funds or other COVID-19 relief funding, it is important to clearly denote which expenses will be applied to each funding source to ensure there is no duplication of funds. Tracking within the accounting system can help keep records organized for this purpose. Although mixing groups of expenses across funding sources is allowed, we recommend keeping them separate, if possible. For instance, it would be simpler to have the payroll for one full month claimed to PPP and another month to SVOG rather than trying to mix and match funding sources in the same payroll period. Establishing distinct groups of expenses per funding source reduces the burden of complex calculations for the organization and makes reviews easier for the auditor.


4. Stay Apprised of Latest Frequently Asked Questions (FAQ) Guidance

Has your organization seen the latest FAQ (2/16 at the time this post was written and not currently posted on the SBA website)? If not, it provided clarity on “incurred cost” timing, application of federal procurement rules prior to award, reasonableness standards for owner payouts and compensation, required tracking of inventory, equipment purchases and more. It’s important to stay abreast of the most recent guidance in order to ensure audit-readiness.


5. Strategically Align Audit Periods

Organizations may strategically allocate SVOG funds to expenses in certain fiscal years in consideration of Single Audit triggers. Each fiscal year during which $750,000 of federal award funds is expended is subject to a Single Audit. If possible, organizations should consider aligning expense claims to a particular year to avoid audits in multiple years. This primarily applies to organizations that received supplemental funding and can incur costs going into 2022. As a reminder, a fiscal year would not be


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