Though the COVID-19 pandemic has ravaged many industries, the restaurant industry was hit particularly hard. Government-mandated lockdowns, social distancing requirements, COVID restrictions, high food prices, and a labor shortage left many restaurants struggling to keep their doors open.
To help restaurants survive, multiple federal aid packages were approved, included the CARES Act programs and the restaurant revitalization fund. If your restaurant accepted federal aid, you might be subject to the Single Audit. Here’s what you need to know.
What is the Single Audit?
The Single Audit is an audit that reviews your financial statements and your compliance with the requirements for the federal aid program that you received your relief from.
If your restaurant received $750,000 or more in federal relief funds during a fiscal year, you’re required to complete the Single Audit.
Think you’re subject to the Single Audit? A restaurant CPA can help you start preparing for the audit.
What Does the Single Audit Entail?
There are two parts of The Single Audit: a financial statement audit and an audit of your restaurant’s compliance with federal relief requirements.
The audit of your financial statements is completed according to government auditing standards and generally accepted accounting standards. Your financial statements are reviewed to determine if your restaurant has adequate internal controls and adheres to any applicable laws and regulations.
During the compliance portion of the audit, your financial records and the terms of your federal relief program are reviewed. Some items that are likely to be examined are whether the expenses you paid with the relief money were allowable and your adherence to reporting deadlines.
What Should You Do to Prepare for a Single Audit?
The Single Audit often feels overwhelming, especially if you’ve never had to do one.
If you think you’re required to complete the Single Audit, contact an experienced restaurant CPA. A restaurant CPA will review your documents and relief information to determine if you need to prepare for the audit.
Should you learn that you are subject to the Single Audit, your CPA will examine your statements, documents, and internal controls to see if there are any areas where your restaurant isn’t in compliance.
It isn’t sufficient to merely have internal controls in place. You need to be able to prove during the Single Audit that these controls are effective and function as intended.
Your restaurant CPA will also work to gather financial statements, receipts, and other supporting documents that prove you used your federal relief money according to the program’s regulations. They’ll review the terms of your rewards program and confirm that you have everything you need to prove that you’re in compliance.
Need more time to gather statements and documentation for the Single Audit? Your CPA can file an extension for your audit so that you have ample time to prepare.
Ready to work with a restaurant CPA to prepare for your audit? Contact Gurian CPA Firm today!
