Louisiana Legislative Auditor, Agreed-Upon Procedures Report on the Louisiana Department of Treasury Main Street Recovery Program, July 2020 - January 2021 (May 5, 2021)

Summary

An Agreed-Upon Procedures Report on the Louisiana Department of Treasury Main Street Recovery Program (MSRP), covering July 2020 through January 2021, issued May 5, 2021 by the Louisiana Legislative Auditor. The Independent Accountant's Report, dated April 15, 2021 and addressed to Louisiana State Treasurer John M. Schroder, describes procedures on the completeness and accuracy of grant applications submitted by Louisiana businesses. The first sample consisted of 6,687 grant awards totaling $79,719,218, with exceptions totaling $4,616,383 noted in 556 grant applications. The two samples combined consisted of 7,323 grant awards totaling $87,792,565. The background section states that the MSRP includes $275 million for grants of up to $15,000.

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“Louisiana Legislative Auditor, Agreed-Upon Procedures Report on the Louisiana Department of Treasury Main Street Recovery Program, July 2020 - January 2021 (May 5, 2021).” Original at app.lla.state.la.us. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/louisiana-legislative-auditor-agreed-upon-procedures-report-on-the-lou-a3bf4eabbd/, SHA-256 83f23dc7720662777a6cf4f2937ddd6324cff777e88150dc478f3b12160bfbb1.

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An Agreed-Upon Procedures Report on the
LOUISIANA DEPARTMENT OF TREASURY
MAIN STREET RECOVERY PROGRAM
JULY 2020 - JANUARY 2021
Issued May 5, 2021

INSIDE
1 INDEPENDENT ACCOUNTANT’S REPORT
4 BACKGROUND
6 MANAGEMENT’S RESPONSE
LOUISIANA LEGISLATIVE AUDITOR
1600 NORTH THIRD STREET
POST OFFICE BOX 94397
BATON ROUGE, LOUISIANA 70804-9397

LEGISLATIVE AUDITOR
MICHAEL J. “MIKE” WAGUESPACK, CPA

DIRECTOR OF RECOVERY ASSISTANCE
JOHN L. MOREHEAD, CPA

Under the provisions of state law, this report is a public document. A copy of this report has been
submitted to the Governor, to the Attorney General, and to other public officials as required by state
law. A copy of this report is available for public inspection at the Baton Rouge office of the
Louisiana Legislative Auditor and online at www.lla.la.gov.

This document is produced by the Louisiana Legislative Auditor, State of Louisiana, Post Office
Box 94397, Baton Rouge, Louisiana 70804-9397 in accordance with Louisiana Revised Statute
24:513. One copy of this public document was produced at an approximate cost of $0.25. This
material was produced in accordance with the standards for state agencies established pursuant to
R.S. 43:31. This report is available on the Legislative Auditor’s website at www.lla.la.gov. When
contacting the office, you may refer to Agency ID No. 7430 or Report ID No. 52210002 for
additional information.

In compliance with the Americans With Disabilities Act, if you need special assistance relative to
this document, or any documents of the Legislative Auditor, please contact Jenifer Schaye, General
Counsel, at 225-339-3800.
April 15, 2021

Independent Accountant’s Report on the
Application of Agreed-Upon Procedures

MR. JOHN M. SCHRODER, LOUISIANA STATE TREASURER
LOUISIANA DEPARTMENT OF TREASURY
Baton Rouge, Louisiana

We have performed the procedures enumerated below, which were agreed to by the
Louisiana Department of Treasury (Treasury) management, on the completeness and accuracy of
grant applications and supporting documentation submitted by Louisiana businesses to Treasury
for payment under the Main Street Recovery Program (MSRP) during the period July 1, 2020,
through January 31, 2021. Treasury management is responsible for the completeness and accuracy
of the grant applications and supporting documentation submitted by Louisiana businesses under
the MSRP. The sufficiency of these procedures is solely the responsibility of Treasury
management. Consequently, we make no representation regarding the sufficiency of the
procedures enumerated below, either for the purpose for which this report has been requested or
for any other purpose.

For the period July 1, 2020, through January 31, 2021, we confirmed the completeness and
accuracy for two samples of grant applications and supporting documentation submitted by
Louisiana businesses. The first sample was conducted on a judgmental basis prior to payment and
consisted of 6,687 grant awards totaling $79,719,218. As a result of applying our procedures, we
noted exceptions totaling $4,616,383 (5.79% of $79,719,218 analyzed) in 556 grant applications.
MSRP staff worked with the grant recipients to resolve exceptions totaling $3,803,934 (82.40%
of exceptions noted in first sample). Treasury management issued demand letters to recover
$456,838 in unresolved exceptions.

The second sample was a statistically valid random sample conducted after payment from
a population of 14,116 grant awards totaling $172,168,303. The sample of 636 1 applications
totaled $8,073,347. As a result of applying our procedures, we noted exceptions totaling $346,147
(4.29% of $8,073,347 analyzed) in 30 grant applications. Projecting the sample exception results
of 4.29% to the population of $172,168,303 yields exceptions ranging from $7,012,681 to
$7,750,857.

1
The sample size was calculated using a 99% confidence level and a 5% margin of error.

1600 NORTH THIRD STREET • POST OFFICE BOX 94397 • BATON ROUGE, LOUISIANA 70804-9397
WWW.LLA.LA.GOV • PHONE: 225-339-3800 • FAX: 225-339-3870
Main Street Recovery Program Independent Accountant’s Report

The two samples combined consisted of 7,323 grant awards totaling $87,792,565. The
following table presents a breakdown of the exceptions we noted for the two samples by finding
type (Table 1).

Table 1
Exceptions by Finding Type
Unresolved
Exceptions
Exceptions
as a Percent
Finding Number of Exception Resolved Unresolved as a Percent
of Total
Type Occurrences Amount Exceptions Exceptions of Total
Analyzed
Analyzed
($87,792,565)
($87,792,565)
Applicant
168 $1,899,803 2.16% $1,523,641 $376,162 0.43%
Ineligible
Unsupported
QuickRelief 268 2,110,617 2.40 1,665,757 444,860 0.51
Expenses

Unsupported
Itemized 150 952,110 1.09 614,536 337,574 0.38
Expenses

Total 586 $4,962,530 5.65% $3,803,934 $1,158,596 1.32%

Following are the procedures we applied and the resulting findings for the three finding
types (Applicant Ineligible, QuickRelief Expenses Not Supported, and Itemized Expenses Not
Supported) mentioned in Table 1 above.

PROCEDURE: We confirmed that the applicant met all eligibility requirements set forth in
Act 311 of the 2020 Regular Legislative Session.

FINDING: Of the 7,323 grant applications we confirmed, the applicant met all
eligibility requirements for 7,155 (97.71%). However, we noted exceptions
totaling $1,899,803 (2.16% of $87,792,565 analyzed) in the other 168 grant
applications. MSRP staff worked with the grant recipients to resolve
exceptions totaling $1,523,641. The unresolved exceptions total $376,162
(0.43% of $87,792,565 analyzed).

PROCEDURE: We confirmed that the QuickRelief Grant awards met all eligibility and
documentation requirements set forth in MSRP policies.

FINDING: Of the 6,766 QuickRelief awards we confirmed, 6,498 (96.04%) met all
eligibility and documentation requirements set forth in MSRP policies.
However, we noted exceptions totaling $2,110,617 (2.40% of $87,792,565
analyzed) in the other 268 QuickRelief awards. MSRP staff worked with

2
Main Street Recovery Program Independent Accountant’s Report

the grant recipients to resolve exceptions totaling $1,665,757. The
unresolved exceptions total $444,860 (0.51% of $87,792,565 analyzed).

PROCEDURE: We confirmed that the Itemized Expenses Grant awards met all eligibility
and documentation requirements set forth in MSRP policies.

FINDING: Of the 557 Itemized Expenses awards we confirmed, 407 (73.07%) met all
eligibility and documentation requirements set forth in MSRP policies.
However, we noted exceptions totaling $952,110 (1.09% of $87,792,565
analyzed) in the other 150 Itemized Expenses awards. MSRP staff worked
with the grant recipients to resolve exceptions totaling $614,536. The
unresolved exceptions total $337,574 (0.38% of $87,792,565 analyzed).

This agreed-upon procedures engagement was conducted in accordance with attestation
standards established by the American Institute of Certified Public Accountants and the standards
applicable to attestation engagements contained in Government Auditing Standards, issued by the
Comptroller General of the United States of America. We were not engaged to, and did not
conduct, an examination or review, the objective of which would be the expression of an opinion
or conclusion, respectively, on the completeness and accuracy of the grant applications and
supporting documentation submitted by Louisiana businesses to Treasury for payment under the
MSRP during the period July 1, 2020, through January 31, 2021. Accordingly, we do not express
such an opinion or conclusion. Had we performed additional procedures, other matters might have
come to our attention that would have been reported to you.

The purpose of this report is solely to assist Treasury management in evaluating the
completeness and accuracy of grant applications and supporting documentation submitted by
Louisiana businesses under the MSRP during the period July 1, 2020, through January 31, 2021.
Accordingly, this report is not suitable for any other purpose. By provision of state law, this report
is a public document and has been distributed to the appropriate public officials.

Respectfully submitted,

Michael J. “Mike” Waguespack, CPA
Legislative Auditor
MJW/aa
MSRP 2020

3
BACKGROUND

The Louisiana Department of Treasury (Treasury) is the state agency responsible for
administering the Main Street Recovery Program (MSRP), under the authority granted to it by
Act No. 311 of the 2020 Regular Legislative Session.

The MSRP includes $275 million to be distributed to small businesses in the state of
Louisiana via grants of up to $15,000 for expenses and business interruption related to the COVID-
19 virus pandemic. Funding for the grant program was made available to the state in the
“Coronavirus Aid, Relief, and Economic Security Act” or “CARES Act” on January 3, 2020, by
the United States Congress.

Louisiana businesses submit grant applications and supporting documentation to Treasury
for payment under the MSRP. Our engagement with Treasury requires the Louisiana Legislative
Auditor’s (LLA) engagement team to confirm the completeness and accuracy of the grant
applications and the supporting documentation submitted by Louisiana businesses.

Treasury, through its contractor Postlewaite and Netterville (P&N), reviewed the grant
applications and supporting documentation submitted by Louisiana businesses to ensure applicant
and grant award eligibility and sufficiency of the documentation provided as required by the
CARES Act, Act 311 of the 2020 Regular Session, and MSRP policies. After Treasury’s review
and approval of grant applications, the LLA engagement team confirmed applicant and grant
award eligibility and the sufficiency of the documentation provided as required by the CARES
Act, Act 311 of the 2020 Regular Session, and MSRP policies and reported all findings to Treasury
management. Treasury management directed the MSRP staff to work with grant recipients to
resolve the findings.

4
APPENDIX A

Management’s Response

5
6
7

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