What does the acronym SEFA mean and what are management’s responsibilities for it?  The SEFA is the acronym for “Schedule of Expenditures of Federal Awards”.  This schedule is prepared when a single audit is required under Federal guidelines and lists all of the Federal expenditures for the year end along with other information that must be reported.

Knowing what a SEFA is and what is required to be included in it is important to entities being audited because if any of the components are missing or overlooked the auditor may have to report a compliance violation and/or an internal control matter.  So if you prefer not being the recipient of audit findings for non-compliance or internal control matters, this article will help you avoid them.

Why does management have to prepare the SEFA – isn’t the auditor responsible for preparing the SEFA?

If you have experience working with Federal awards or grants, then you should be familiar with the Uniform Guidance or the UG which is the Federal law that must be complied with when a federal award is received. The UG can be found in the Federal Register at 2 CFR Chapter 1 and Chapter 2, Parts 200 et.al.  It specifies in section 200.510(b) that the auditee (management) must prepare a schedule of expenditures of Federal awards and specifies what it should include.  Section 200.502 defines what is meant by a Federal award expended to be included in the SEFA.  A SEFA must be prepared when $750,000 or more in Federal awards have been expended.  The auditor can assist with preparing the SEFA as a “non-audit” service if independence safeguards are identified under Government Auditing Standards, but it is management’s responsibility to make sure all the required information is included.

What are the required elements that are required to be reported on the SEFA per UG Section 200.510(b)?

Following are the elements that are required to be reported and included on the SEFA:

• Include a complete and accurate listing of all Federal expenditures as determined in accordance with Section 200.502 and the Federal grant award
• List individual Federal awards by Federal agency
  • Total Federal awards expended listed by the Catalog of Federal Domestic Assistance (CFDA) number or other identifying number when the CFDA is not available
  • For Federal awards received as a subrecipeint, the name of the Pass Through Entity (PTE) and the identifying number assigned to the PTE
  • Include the total amount provided (or passed through) to subrecipients from each Federal award
  • For clusters, provide the cluster name, list individual Federal awards within the cluster and provide the applicable Federal agency name. Also provide a total of Federal expenditures for each cluster reported
  • For Research and Development (R&D), the total Federal expenditures must be shown either by Federal award or by Federal agency and major subdivision within the Federal agency
  • For loan or loan guarantee programs described in Section 200.502:
    • provide the basis for determining the Federal awards expended
    • identify in the notes to the SEFA the balances outstanding at year end
    • Also report the Federal awards expended for loan and loan guarantee programs in the schedule.
  • Include note disclosures the following:
    • A description of the significant accounting policies used in preparing the SEFA
    • A note indicating whether or not the non-Federal entity elected to use the 10% de minimus cost rate as covered in UG Section 200.214.

What qualifies for a Federal award?

UG Section 200.502 describes the basis for determining Federal awards expended which includes an activity that requires the non-Federal entity to comply with Federal statues, regulations and the terms and conditions listed in the Federal award.  These may include the following:

• Expenditure/expense transactions related to grants/contracts;
• Disbursement of funds passed through to subrecipients;
• Use of loan proceeds under loan and loan guarantee programs;
• Receipt of property;
• Receipt or use of program income;
• Disbursement of amounts entitling the non-Federal entity to an interest subsidy;
• Distribution or consumption of food commodities;
• Period when insurance is in force

The timing of when a Federal expenditure is required to be reported on the SEFA may be specified in the Federal compliance supplement of the federal program. One example of a specific determination of when to report a Federal award is in the Disaster Assistance Grants - Public Assistance (Presidentially Declared Disasters) CFDA # 97.036 from the Department of Homeland Security.  This grant allows expenditures to be reported on the SEFA only when both of the following occur:

• FEMA has approved the non-Federal entity’s PW.
• The non-Federal entity has incurred the eligible expenditures.  Federal awards expended in years subsequent to the fiscal year in which the PW is approved are to be recorded on the non-Federal entity’s SEFA in those subsequent years. 

For more information, following is a link to the Uniform Guidance and a link to the compliance supplements for Federal awards:

Uniform Guidance:

https://www.gpo.gov/fdsys/pkg/FR-2013-12-26/pdf/2013-30465.pdf

Compliance Supplement:

https://obamawhitehouse.archives.gov/omb/circulars/a133_compliance_supplement_2016