Be In The Know When It Comes To The Schedule Of Expenditures Of Federal Awards

Editor’s Note: We originally published this piece last Spring. However, because the information provided within this post is critical to your entity’s ability to secure future funding, we thought it was important to to share it again. Please let us know if you have any questions.

Federal Awards | Schedule of Expenditures | Ohio CPA Firm
It is important for your fiscal officer to understand the requirements involving the preparation and presentation of the SEFA. Keep reading to find out why.

Many local government agencies and public organizations receive assistance and grants from the federal government. As such, they are required to prepare a Schedule of Expenditures of Federal Awards (SEFA) to determine whether they require a single audit (making them a “local auditee”).

If a local auditee expends $750,000 or more in federal funds during its fiscal year, a single audit must be performed under Uniform Guidance, and the local auditee must include a supplemental schedule to the financial statements (the SEFA). An incorrect SEFA could result in an organization concluding that a single audit is not required when it actually is. Inaccuracies can also cause issues during an audit, which can cost the local auditee if they need to engage an auditor to either reissue their report with a revised SEFA or audit a program that was not identified initially.


Read more about Uniform Guidance: Uniform Guidance Procurement Standards Compliance

Federal Expenditures That Must Be Reported

Determining when a federal award is expended should be based on when the federal award activity occurs. As a rule, this activity is related to events that require the non-federal entity to comply with federal statutes, regulations and the terms and conditions of federal awards. The expenditures can be reported on the cash or accrual basis but must be consistently reported on the same accounting basis.

The following lists the different types of federal awards that are required to be reported on the SEFA as expenditures:

  • Grants, cost-reimbursement contracts under the Federal Acquisitions Regulations (FAR), compacts with Native American tribes, cooperative agreements and direct appropriations.
  • The disbursement of funds to sub-recipients (non-federal entities that carry out the grant-funded program but does not include an individual that is a beneficiary of such program). If an organization uses its federal funding to pass down to a sub-recipient, the funds are determined to be expended when the disbursement is made to the sub-recipient.
  • The use of loan proceeds under loan and loan guarantee programs, including interest subsidies. The amount expended will equal the new loan value made or received during the audit period in addition to audit period balance at the beginning of the audit if there are continuing compliance requirements of previous years’ loans.
  • The receipt of property, including surplus property, and the distribution or use of food commodities and other non-cash assistance. The amount expended equals the fair value at the time of receipt or the assessed value provided by the federal agency.
  • The receipt or use of program income.
  • The period when insurance is in force. The amount expended equals the fair value of the insurance contract at the time of receipt or the federal agency’s assessed value.
  • Endowment funds. The amount expended equals the cumulative balance of federal awards for endowment funds that are federally restricted in each audit period in which the funds are still restricted.
  • Free rent. The amount expended equals the fair value at the time of receipt or the assessed value provided by the federal agency if the rent is part of the award to carry out the federal program.

The SEFA must include, as applicable:

  • Every federal program, listed by federal agency. For a cluster of programs, you need to provide the cluster name and any federal programs within the cluster of programs along with the applicable federal agency name.
  • The pass-through entity name and its identifying number for federal awards received as a sub-recipient as well as the total amount provided to sub-recipients from each program.
  • The total federal awards expended for each individual federal program with the Catalog of Federal Domestic Assistance (CFDA) number or other identifying number. Provide the total for the cluster if a cluster of programs.
  • Specific footnotes. An organization has to disclose any outstanding balance of a loan and loan guarantee reported on the SEFA at the end of the audit period. The accounting policies used for preparing the SEFA also must also be disclosed.

It is important for your fiscal officer to understand the requirements involving the preparation and presentation of the SEFA. Ensure your fiscal officer has adequate training on how to compile the SEFA because this is the auditee’s responsibility under the Uniform Guidance. It is imperative for management to implement policies and procedures to ensure both the accuracy of the total expenditures and the expenditures of each individual program.

If there are any misunderstandings in applying the requirements, it could result in your entity not planning to have a single audit when one could be required, causing unexpected costs and time to arrange to have a single audit. It is essential to commit to ensuring your SEFA is complete and accurate. If you need assistance in completing your SEFA or have questions, don’t hesitate to contact our firm. We have a team of CPAs who are prepared to help.

By: Ryan Reichley, CPA (Dublin office)

Be sure to check out these articles about guidelines for government entities:

Six Policies & Procedures All Government Entities Should Implement, Update

Putting The Kibosh On Credit Card Abuse In Local Governments

OMB Increases Procurement Thresholds