SEFA

What is SEFA?

The Schedule of Expenditures of Federal Awards (SEFA) is a comprehensive financial report required of non-federal entities that expend federal funds, including economic assistance, during a fiscal year. The SEFA provides a detailed listing of all federal awards expended, including grants, loans, and other types of federal financial assistance. Its primary purpose is to ensure transparency and accountability in the use of federal funds, and it serves as a foundational document for federal grant compliance and audit processes.

A SEFA report is not just a summary of federal expenditures; it is a structured schedule that must adhere to specific requirements outlined in the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (commonly known as the Uniform Guidance, 2 CFR Part 200). The SEFA is a critical tool for both grant recipients and auditors, as it enables the tracking and verification of federal funds and helps ensure that recipients are meeting their compliance obligations.

What Must Be Included in a SEFA Report?

A complete SEFA report must include the following elements for each federal award:

• The name of the federal agency providing the award.
• The federal program name and Assistance Listing Number.
• The pass-through entity’s identifying number if the award is received through a state or other intermediary.
• The total amount expended for each federal program during the reporting period.
• The total amount provided to subrecipients, if any.
• Any loan or loan guarantee balances outstanding at year-end.
• Footnotes disclosing significant accounting policies used in preparing the SEFA and any additional information required by the Uniform Guidance.

The SEFA must be prepared on the same basis of accounting as the entity’s financial statements (e.g., cash or accrual basis). It should also include a reconciliation of the financial statements, if necessary, to explain any differences between the SEFA and the entity’s reported expenditures.

Who Is Required to Submit a SEFA?

Under 2 CFR § 200.510(b), any non-federal entity (including nonprofit organizations, state and local governments, and Indian tribal governments) that expends $1,000,000 or more in federal awards during its fiscal year is required to prepare and submit a SEFA as part of its Single Audit package.

Entities below the threshold are not required to undergo a Single Audit or submit a SEFA, but they must still maintain adequate records of federal expenditures for potential review or audit by federal agencies.

Common Errors in SEFA Reporting

Several common errors can undermine the accuracy and reliability:

• Omitting federal awards or failing to include all required information, such as the Assistance Listing Number or pass-through entity identifiers.
• Misclassifying expenditures, such as including non-federal funds or indirect costs not allowed under the grant agreement.
• Failing to reconcile the SEFA to the entity’s financial statements, leading to discrepancies.
• Not updating the SEFA for new awards, amendments, or closeouts during the fiscal year.
• Inaccurate reporting of subrecipient expenditures or outstanding loan balances.

These errors can result in audit findings, questioned costs, or even the requirement to repay federal funds. According to the Federal Audit Clearinghouse, a significant percentage of Single Audit findings each year are related to SEFA preparation and reporting deficiencies.

SEFA’s Role in Federal Grant Audits

The SEFA is a cornerstone of the Single Audit process, as required by the Uniform Guidance. Auditors use the SEFA to:

• Identify which federal programs are subject to audit.
• Determine the major programs based on risk and dollar thresholds.
• Test compliance with federal requirements, such as allowable costs, eligibility, and reporting.
• Assess internal controls over federal awards.

A well-prepared SEFA facilitates a smoother audit process and demonstrates the entity’s commitment to federal compliance. Conversely, a deficient SEFA can trigger expanded audit procedures, delays, and potential penalties.

FAQ

What does SEFA stand for?
SEFA stands for Schedule of Expenditures of Federal Awards. It is a required financial report that details all federal funds expended by a non-federal entity during a fiscal year.

What is the purpose of the SEFA in federal grant compliance?
The SEFA provides a transparent and standardized record of federal award expenditures, supporting compliance with federal regulations and serving as the basis for Single Audits and other oversight activities.

Is SEFA reporting required for all types of grants?
Entities that spend $1,000,000 or more in federal funds during a fiscal year, including funds from grants, loans, or cooperative agreements, are required to include those expenditures in their annual financial reporting.

What is the connection between SEFA and Single Audits?
The SEFA is a mandatory component of the Single Audit package. Auditors use the SEFA to select major programs for testing and to assess compliance with federal requirements.

How often should a SEFA be updated?
A SEFA should be prepared and updated annually, covering the entity’s fiscal year. It must reflect all federal expenditures for that period and be submitted with the Single Audit report if required.

Final Thoughts

By understanding SEFA requirements and maintaining accurate reporting, organizations can ensure compliance, facilitate efficient audits, and safeguard their continued eligibility for federal economic assistance. For more information, consult the Uniform Guidance (2 CFR Part 200) and relevant federal agency publications.