Did you receive a Monitoring Action item in your SVOG portal? Monitoring is a regular and important part of all Federal grant programs. It is an SBA-led review of your SVOG award that allows the SBA to directly review the award implementation progress, provide assistance, and assess eligible and allowable use of funds.
A common question we are asked is: if I’m selected for monitoring, do I still need to have an audit or compliance examination performed? If you meet the audit requirements, the answer is, yes, you now need to comply with both requirements. Preparing for the audit requirements and SVOG monitoring are two separate endeavors and should be treated as such – although, they will require you to provide similar items and support.
What is Monitoring?
Monitoring is an SBA-led review of a grantee’s award implementation. The SBA will use monitoring to learn more about the grantee organization, review the award implementation progress, provide technical assistance, and assess eligible and allowable use of funds for a sample of cost items. Not all SVOG awardees will be monitored, but all grantees should be prepared for monitoring in case selected.
Monitoring generally consists of three parts:
- Receipt of a Monitoring Notification Action Item with grantee instructions and a list of requested documentation (generally this will come in the form of a Monitoring Notification Letter and Fiscal Compliance Instructions letter);
- SBA review of grantee submitted documentation; and
- SBA delivery of the Monitoring Report Action Item and subsequent monitoring event closure once any issued corrective actions are resolved.
Generally, you do not need to do anything special to prepare for monitoring, as long as you keep detailed records of your SVOG expenditures. If selected, you should be able to communicate to the SBA how SVOG award funds have been expended. SVOG award expenditures should be tracked by allowable cost category, and supporting documentation should be maintained for all costs charged. If selected for monitoring, you will receive a notification in the portal and an email from the SBA notifying you that an action item is pending response. The action item will provide the monitoring scope and the information and documentation you must provide.
Do I Still Need an Audit or Compliance Examination?
Being selected by the SBA for monitoring does not relieve you of the audit requirements.
If you received SVOG funding of less than $750,000, no audit is required. If you received or spent more than $750,000 of SVOG funds in 2021 or 2022, you may be required to complete one of the SBA audit requirements. Because the SVOG funds were not received until 2021, all expenses allocated to 2020 will be combined with 2021 to determine if you meet the $750,000 threshold. One of the following options must be used to meet the SBA audit requirements if the audit threshold is reached:
- A compliance examination engagement
- An audit of the entity’s financial statements
- A single audit conducted in accordance with 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
- A program-specific audit conducted in accordance with 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
If your company already has an annual audit of your financial statements performed, simply submit those audited financial statements, and your audit requirement is complete. For those without audited financial statements, the compliance examination engagement will be the most cost effective and best solution.
Need Help or Guidance?
Sikich’s team of professionals performs countless compliance examinations, financial audits, single audits, and program-specific audits each year and has firsthand, in-depth experience with entertainment and for-profit businesses.
Are you a member of a CPA firm that doesn’t perform these audits? We would love to help you and your clients with these requirements. Please reach out to learn how we can add value to your SVOG clients.
Or, if you need answers quick, call our SVOG specialists to talk to us about your situation or to receive a fee quote for a compliance examination.