How Shuttered Venue Operator Grant Recipients Can Get Ready for a Single Audit

The continuing COVID-19 pandemic has spared no industry, and the entertainment industry was particularly hard hit because of the lengthy lockdowns mandated by state regulations. The damage spanned various forms of entertainment and venues.

In response, the federal government created the Shuttered Venue Operators Grants (SVOG) program as part of both the Consolidated Appropriation Act (CAA) of December 2020, and American Rescue Plan Act (ARPA) of March 2021. The program included $16 billion in assistance available to a variety of shuttered venues and production companies, administered by the Small Business Administration’s (SBA) Office of Disaster Assistance. There also was a supplemental application later in 2021.

Any for-profit entity receiving the SVOG and expending more than $750,000 in federal funding in one fiscal year will have the option of either providing a Single Audit or submitting an audited financial statement for that fiscal year. A not-for-profit that expends more than $750,000 in federal funding in one fiscal year will have to submit a Single Audit.

Who Benefits from the Shuttered Venue Operators Grants?

Though the application period for the SVOG has since closed, eligible entities received up to $10 million. (Grants were calculated as the lesser of 45% of gross earned revenue or $10 million.)

Eligible venues, which were required to have been in operation as of Feb. 29, 2020, included live performing arts venues, relevant museum operators, certain zoos and aquariums, movie theater operators and talent representatives. The lengthy restrictions for each type of eligible entity are detailed on the SBA SVOG FAQ website.

Grantees are not required to repay the funds as long as they are used for eligible costs incurred between March 1, 2020, and Dec. 31, 2021, or June 30, 2022, if the entity received Supplemental Phase SVOG funds.

The variety of expenses for which the funds can be used include:

  • Payroll, rent and utility payments
  • Scheduled mortgage and debt payments
  • Worker protection expenditures
  • Admin costs and state and local taxes and fees
  • Lease and insurance payments
  • Other ordinary and necessary business expenses, including maintenance
  • Advertising, production, transportation and capital expenditures related to producing a theatrical or live performing arts production

Grantees must maintain documentation demonstrating their compliance with eligibility and other requirements of the SVOG program. Grantees must retain employment records for four years following their receipt of the grant and retain all other records for three years.

The Consolidated Appropriations Act made clear that amounts received under the SVOG “shall not be included in the gross income of the entity that receives such grant for tax purposes.” Expenses paid with funds from SVOGs are deductible, notwithstanding the general prohibition on deducting expenses that are reimbursed to the taxpayer as the law states “no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied” as a result of the SVOG being excluded from gross income.

Where the Single Audit Comes In

The Single Audit Act requires non-federal entities that receive and expend $750,000 or more of federal financial assistance in a fiscal year to have a Single Audit performed by their auditors. A Single Audit is an audit of the non-federal entity’s financial statements and a compliance audit, which is performed in accordance with Uniform Guidance. Auditors are required to use OMB’s Compliance Supplement to perform the compliance portion of the Single Audit. The Supplement is an annual document that describes specific audit requirements that auditors must use to perform their audits.

The SBA will direct grantees who expend more than $750,000 in federal financial assistance in one fiscal year to submit their Single Audit or audited financial statement (for profit entities only) during the post-award oversight, monitoring and audit phase that SBA will conduct.

The latest compliance supplement was issued in late August 2021 for fiscal year ends on or after June 30, 2021, by the U.S. Office of Management and Budget’s (OMB), and specific guidance for the SVOG program (CFDA number 59.075) was absent from the compliance supplement. Therefore, the auditor must determine the requirements governing the SVOG program by reviewing the provisions of the award document and laws and regulations referred to in the award document and utilizing part seven of the Uniform Guidance Compliance Supplement. While a federal program is probably multi-faceted and will have several compliance requirements, there will usually be a few key compliance requirements that could have a direct and material effect on the program.

The auditor will need to determine compliance requirements, and that involves several steps by addressing the following questions:

  • What are the program objectives, program procedures and compliance requirements for SVOG?
  • Which of those compliance requirements have a direct and material effect on the program?
  • Which of the compliance requirements are susceptible to testing by the auditor?
  • Into which of the 12 types of compliance requirements does each compliance requirement fall?

There are 12 types of which the compliance requirements are grouped. Some may not apply to the SVOG awards, but ultimately it will be up to the auditors’ judgement on which of these compliance requirements must be tested.

  • Activities Allowed or Unallowed. These are related to activities that the SBA has determined the funds can be used for or cannot be used for. A lot of this is outlined in the SVOG FAQs section.
  • Allowable Costs. This section describes the types of costs that can be charged to the federal program. Usually, only necessary and reasonable costs can qualify. Your entity should review the budget submitted with the SVOG grant request. Once the budget is reviewed, look at expenditures during the period of March 1, 2020, to December 31, 2021, or June 30, 2022, if the entity received Supplemental Phase SVOG funds. Compile expenses that will fit into the grant budget categories and ensure that they are properly coded to those expenses in the general ledger of the entity. The SBA FAQs has examples of allowable expenses and the SBA’s interpretations. Don’t forget that capital expenditures can be part of the budget as well. Create reports in your accounting software to monitor and track the allowable expenses to budget.
  • Cash Management. Since the SVOG funds were advanced, an organization must minimize the time in which they receive the funds and spend the funds on the appropriate and allowable costs.
  • Eligibility. This relates to beneficiary eligibility and not organizational eligibility. The SBA already vetted the eligibility of the entity that received the SVOG funds. Therefore, this would not apply to the SVOG.
  • Equipment and Real Property Management. This compliance requirement applies if equipment or real property of $5,000 or more is purchased with federal grant funds. If the amount is below $5,000 but above the entity’s capitalization policy, this requirement applies.
  • Matching, Level of Effort, Ear-marking. This is specific to each grant and since there is no specific compliance guidance for the SVOG, this does not apply.
  • Period of Performance. Grants may specify a time period during which the entity may use the federal funds and, as stated earlier, the SVOG has such a time frame. The period of eligible expenditures is from March 1, 2020 to December 31, 2021, or June 30, 2022 if the entity received Supplemental Phase SVOG funds.
  • Procurement, Suspension, and Debarment. Entities must use their own documented procurement procedures provided that the procurements conform to applicable federal statutes and procurement requirements identified in Uniform Guidance. Organizations are also prohibited from contracting with, or making subawards under covered transactions to, parties that are suspended or debarred.
  • Program Income. This is the gross income earned by an entity that is directly generated by a supported activity or earned as a result of a federal award. Think of it as fees charged to participants in the SVOG program. We believe that this compliance requirement is not applicable to the SVOG program.
  • Reporting. This relates to the reporting required to the federal agency.
  • Subrecipient Monitoring. If an organization passes federal funds to another entity that will be running the program on their behalf, they must identify the various requirements to the other organization, evaluate the risk of that entities’ noncompliance and monitor their activities. This would not be applicable to SVOG.
  • Special Tests and Provisions. The specific requirements for special tests and provisions are unique to each federal program and will be addressed in the compliance supplement. Since the SBA did not include the SVOG program in the Compliance Supplement, this is not applicable.

An extra item we always recommend is to review the entity’s operational internal controls of the organization. Make sure to have your internal controls in good working order. If you have had an audit in the past year or two and received a material weakness or significant deficiency from your auditor, you should work to resolve those issues as soon as possible.

Recipients of the SVOG grant can also obtain information at

Our team of professionals, which has a strong competency developed by years of experience with Single Audits, is watching for further updates on what is expected for a Single Audit for this program. In the meantime, if you have questions about preparing for a Single Audit or whether the requirement applies to you, contact us.

A version of this article was originally published by Marks Paneth in August 2021 and updated in September 2021. CBIZ acquired Marks Paneth and Mayer Hoffman McCann P.C. acquired the attest practice of Marks Paneth in January 2022.

Published on February 24, 2022