SEFA Preparation

The Single Audit Act establishes requirements for audits of States, local governments and Indian tribes that expend over a threshold amount in Federal awards during a fiscal year. Governments that are subject to the Single Audit Act are required to prepare and have audited a Schedule of Expenditures of Federal Awards (SEFA).[1] The SEFA reports amounts expended, not the amount received, during the fiscal year.[2] Uniform Guidance requires that the independent auditor performing a Single Audit render an in-relation-to opinion on the SEFA as part of the independent auditor’s report on the government’s financial statements.[3] While preparing GAAP basis financial statements can be a daunting task, most of the necessary information (numbers) is located in the general ledger. A SEFA does contain financial statement numbers, but it also contains other information not typically found in a general ledger, such as federal agency assistance listings numbers, pass-through entities, program names, and subrecipient information.

Governments should create a repository (electronic file) of relevant grant information that is accessible to the preparers of the SEFA and those who administer the grants. At a minimum, the repository should contain the following for each federal grant: [4]

• Grant agreement and notice of the award, as applicable
• Type of grant (e.g., reimbursement basis or structured payments)
• Program name and cluster title (if applicable)
• Name of federal funding agency
• Pass-through entity (if applicable)
• Assistance listing number (formally known as the CFDA number)
• Pass-through entity identifying number (if applicable)
• Amount passed through to each subrecipient (if applicable)
• Award amount
• Award date
• Match requirement (if applicable)
• Period of performance

The SEFA should be prepared on the same basis of accounting as the financial statements.[4]

• In order to facilitate timely and accurate preparation of a SEFA for fiscal year end, a monthly reconciliation of expenditures in the general ledger should be performed. Governments should include grant-specific coding in their charts of accounts in order to identify eligible expenditures. Governments should review grants included in the previous year’s SEFA to determine if they should be included in the current year SEFA.
• In situations where expenditures reported in the SEFA are not the same as the expenditures reported in the general ledger (due to outstanding loan balances, timing of grant awards, expenditures incurred in a prior period, etc.), a reconciliation should be included in the notes to the SEFA.[5]
• Governments should ensure that the Single Audit is submitted to the Federal Audit Clearinghouse in accordance with Federal guidelines.