DreamSpring, Inc. and Subsidiaries

Findings and Questioned Costs ? Major Federal Award Programs Finding 2020-001: Ineligible Small Business Financial Assistance (Other Noncompliance) (Significant Deficiency) Federal Agency: Department of Treasury Title: Coronavirus relief program CFDA Number 21.019 Pass-Through Agency: Colorado Housing and Finance Authority Pass-Through Number: CTGG1-2021-0158 Award Period: August 19, 2020 through December 31, 2002 Criteria: DreamSpring received a subgrant from Colorado Housing and Finance Authority under the CARES Act to provide financial assistance to small businesses in the state of Colorado who were impacted by the COVID-19 pandemic. The small business had to meet a number of requirements to be eligible for the financial assistance. One of the requirements was the small business had to be in good standing with the Secretary of State of Colorado. Condition: DreamSpring made financial assistance payments to 5 of 60 disbursements tested to small businesses that were either not in good standing or support could not be provided to substantiate being in good standing with the Secretary of State of Colorado at the time the evaluation of the small business was made. Questioned costs: $26,722 Context: DreamSpring was not able to provide the certificates of good standing issued by the Secretary of State of Colorado as part of the evaluation of the financial assistance determination. These documents were required to be included as part of the evaluation process for businesses that were not sole proprietors. Cause: DreamSpring did not save the support for ensuring the businesses were in good standing with the Secretary of State of Colorado at the time of evaluation or the information on the Secretary of State?s website indicated the small business was not in good standing. Effect: Financial assistance payments may have been made to small businesses that were not eligible preventing other small businesses that may have been eligible from receiving the financial assistance. Recommendation: We recommend DreamSpring implement and communicate policies and procedures that would ensure the necessary support was obtained and saved to substantiate financial assistance was made to eligible small businesses. Views of Responsible Official and Corrective Action Plan: DreamSpring entered into this contract, which is beyond the scope of our core business model, as a way of further serving hard-hit Colorado entrepreneurs during the pandemic. One DreamSpring team member received training from the program administration staff who then trained the rest of the team on the required procedures. The Fluxx system, issued by the program administrators, attempted to control the process by prompting the user to upload the required documents in a specific way. Unfortunately, the system was full of technical glitches and documents often took multiple attempts before being uploaded properly. The system also prompted the user to upload documents that were unnecessary in all cases. For example, the Certificate of Good Standing was not required for Sole Proprietor businesses which forced the users to regularly bypass notifications. These circumstances, along with the high volume of requests, and the one-time nature of the project, created less-than-ideal conditions despite our best attempt to follow the guidelines of the program. Upon notice of missing items, the DreamSpring team took two courses of action. First, the team reviewed file databases looking for records that the work was performed but not uploaded. Second, the team pulled additional Certificates of Good Standing to confirm these clients were in good standing at the time the grant was issued. In hindsight, 4 of the 5 were in good standing and eligible for the financial assistance. Only one was found to be issued incorrectly. The program is not ongoing; therefore, there are no specific correcting actions going forward.

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