Do you need to have an audit done on your Covid-related SBA loan? That depends on whether you got a PPP or EIDL loan.
If you got a Paycheck Protection Program (PPP) loan from the Small Business Administration, the answer is no. The PPP loans are from the SBA, administered through a lender. The onus is on the lender to determine whether or not you spent the money correctly.
Do You Need an Audit on Your COVID Small Business Loan?
But if you got an EIDL (Economic Impact Disaster Loan) the answer is yes. The answer is yes only if your loan is equal or greater than $750,000. The EIDL comes directly from the SBA to the recipient. Because there is no financial institution as intermediary, which would do an audit, you must have one completed.
What’s the Timeline?
There’s a timeline to get the audit done. It should have been done by the end of the fiscal year, June 30, 2020.
But you are currently allowed to get the audit completed by six months after that date. You don’t need to seek approval for an extension. But when the audit is filed, you must include documentation explaining the delay.
Who Does Single Audits?
The Uniform Guidance Single Audit is a requirement of the US Office of Management and Budget’s Uniform Grant Guidance. Any nonprofit or government entity (such as states, cities, universities) that spends $750,000 or more of federal assistance money during a fiscal year must have a single audit done.
The audit is done to make sure that the money has been spent according to the stipulations of the grant money. It’s called a single audit because that’s all that’s being audited – the money you got, and how you spent it. The audit doesn’t cover business financial dealings that aren’t related to the grant money and the grant money spending.
You can’t do the audit in house. It must be done by an independent auditor working for a licensed CPA firm which is enrolled in peer review.
The American Institute of Certified Public Accountants (AICPA) bylaws state that if you are an AICPA member active in the practice of public accounting, you must be associated with a firm that participates in an AICPA-approved practice-monitoring program if the firm performs services within the scope of the peer review standards and issues reports in accordance with AICPA professional standards. In other words, the CPA firm you choose should be an AICPA member.