What is the SEFA and How is it Used?
In its simplest form, the SEFA is a financial statement schedule that lists an organization’s expenditures of federal assistance for the fiscal year by federal agency, grant number and amount. It is the organization’s (auditee’s) responsibility to prepare a complete and accurate SEFA, which is a key component of the reporting package required under the Uniform Guidance. The SEFA is also used by external auditors to determine the required procedures and test work under the Uniform Guidance.
How to Accumulate the Data for the SEFA
Every grant and award received needs to be evaluated in order to determine the funding source. A checklist or standard intake form should be used to document every individual grant/award (even those that do not appear to be federally sourced). This process may involve some sleuthing, as the funding source may not be obvious in the grant/award paperwork.
- All grants/awards should be reviewed in detail to determine if they contain any special provisions (for example, some awards require they be treated as major programs, even though they might not otherwise qualify as such).
- If the grant/award contains federal funding, the organization will obtain the following: name of the federal agency, award period, Catalog of Federal Domestic Assistance (CFDA) number.
- The grant/award should also be researched to determine if it is part of a cluster (including research and development) or a federal loan program.
- If the grant/award is passed through to/ from a subrecipient, the organization will obtain the pass-through entity identifying number.
Gathering this information is time consuming, and obtaining the name and contact information of the program manager can be invaluable.
Prior to the grant/award becoming operational, the organization should review the OMB Compliance Supplement’s Matrix of Compliance Requirements. For every federally funded grant/award, personnel should be assigned for each area of compliance. Expenditures must be tracked for each individual grant/award. The accounting system must be set up to capture this information, and individuals must be established to assign expenses to each grant/award.
How to Prepare a Complete and Accurate SEFA
If the organization has a good system of accumulating data for grants/awards, preparation of the SEFA should not be difficult. It is simply a matter or organizing the data in the appropriate format. The draft SEFA should be reviewed for the following:
- Are all awards sorted by federal program and agency?
- If received through a subrecipient, is the name and number of pass-through entity included?
- Review Uniform Guidance for clusters of awards. Are the federal programs within that cluster all separately identified within the cluster?
- Are Research and Development awards totaled by federal award?
- Are total federal awards excluded for loan or are loan guarantee programs included?
- Are total federal awards provided to subrecipients by program totaled?
- Are the required footnotes to the SEFA prepared?
- If any non-federal awards are included in the SEFA, are they clearly segregated and designated as non-federal awards?
Where are Some Useful Resources?
Organizations are encouraged to review the 2017 and 2018 Uniform Guidance Compliance Supplements located at Whitehouse.gov. The AICPA’s Government Audit Quality Center provides a free resource center for auditees.
Please contact your Lindquist LLP representative as soon as your organization anticipates an annual audit under the requirements of the Uniform Guidance. We can assist you early in the process at an organizational level. This will help assure a smooth and successful process.