Posts tagged with "schedule of expenditures of federal awards"

What you should know about preparing your Schedule of Expenditures of Federal Awards (SEFA)?

Not-for-profit organizations often seek out grants and other awards in order to provide the necessary funding for their programs. It is important to know the source of all grants and awards as well as the requirements of the U.S. Office of Management and Budget’s (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Final Rule (Uniform Guidance). In this article we will explore a small but very important part of the Uniform Guidance requirements: The Schedule of Expenditures of Federal Awards (SEFA).

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 research, 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:

  1. Are all awards sorted by federal program and agency?
  2. If received through a subrecipient, is the name and number of pass-through entity included?
  3. Review Uniform Guidance for clusters of awards. Are the federal programs within that cluster all separately identified within the cluster?
  4. Are Research and Development awards totaled by federal award?
  5. Are total federal awards excluded for loan or are loan guarantee programs included?
  6. Are total federal awards provided to subrecipients by program totaled?
  7. Are the required footnotes to the SEFA prepared?
  8. 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 us to help you with 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 to manage your federal funds and the related compliance requirements.

Effective Grants Management

In order to provide effective grants management, we need to make sure that we are performing bookkeeping at the grant level.  Our grant accounting needs to properly allocate costs to the grants while maximizing our grant reimbursement and avoiding any cost disallowance.

There are several things that lead towards effective grants management which includes financial policies and procedures, adequate supporting documentation, ability to produce Schedule of Expenditures of Federal Awards (SEFA), and proper base to apply indirect cost rate.

Our board members and related governance should be knowledgeable and informed about grant budgets and compliance requirements.  The board should stay knowledgeable of grant administration trends, developments, and regulations.  The board should understand what the organization is committed to and are Its programs delivering what is required.

The program staff needs to be involved in the data collection and reporting responsibilities including the proper reporting to the correct grant budget categories.  We need to establish and schedule future grant deadlines to insure timely grant report submission.  We would suggest sharing the grant agreement with the program staff to insure all grant requirements and deadlines are met.

If Subrecipient Monitoring is required, you need to perform risk assessment and insure contract requirements are passed along to subrecipients.  You need to understand the appropriateness of monitoring procedures performed.

Federal grants are governed by the super circular which is also referred to as the uniform grant guidance.   Auditors audit based on these requirements with the assumption that the nonprofit is knowledgeable and informed about this grant guidance.  Federal grants and awards are specifically identified and require a financial management system that identifies the source and application of federal funded activities.  Federal grants typically require written procedures around payment requirements, allowability of costs, procurement procedures, and standards of conduct.  For example, procurement procedures need to be written with good procurement records and follow the guidelines.

The grant audit requirements include the ability for management to prepare the Schedule of Federal Awards (SEFA) and it should be reconciled to the accounting records.  If the SEFA is a required part of the audited financial statements, the auditor will issue an opinion if the SEFA is fairly stated as a part of the audited financial statements.

The Financial Management System needs to identify all federal awards received and expended to include the Catalogue of Federal Domestic Assistance (CFDA) information and complete financial results of each federal award.  It sound include comparison of expenditures with budget amounts and identify the source and application of funds form federally funded activities.  The financial policies and procedures should include payment requirements, allowability of costs, procurement procedure, and standards of conduct.  The Internal Controls need to provide reasonable assurance that Federal Award is in compliance with federal statutes and regulations.

Cost allocations are an integral part of effective grants management.  Effective cost allocations will allow to report and recover the fully loaded program costs to facilities and administrative costs.  Some organizations could benefit from documenting their cost allocation and federal programs may require a formal cost allocation plan.  Some acceptable methods of cost allocation would include hours worked for variable costs, and square footage for fixed costs like facilities.

Grant advance would be for grants that provide advanced funding.  It is important that you don’t spend these restricted funds on other activities and you can keep track of restricted expenditures and restricted grant cash balance.  You may want to track these advances by grant and as deferred revenue to show how much of the cash or accounts receivable balance is restricted.

Cost reimbursement for grants require you to submit reimbursement request timely to minimize cash flow delays.   Your grantors typically believe you have already paid these costs when you submit your reimbursement request.  You may want to obtain a line of credit for reimbursement delays and disclose the possible longer payment terms with your contractors and vendors.

The grant reporting needs include grant budgets which match grant budget line items with financial reporting.  Grant reporting should be able to report total grant spending including direct and indirect cost allocation.   Proper grant reporting requires a grant reconciliation to insure internal and external reports agree and that you are maximizing the reimbursement along with minimizing over and under grant spending.  You should be knowledgeable of the Federal Funding Accountability and Transparency Act (FFATA) and Data Collection Form filing.

Grant reconciliations needs to occur on a regular basis and insure internal reporting and external reporting match.  You goal is to insure you maximize reimbursement and minimize any over or under spending.  Some of the reconciling items to consider include matching requirements, program income, and disallowed costs.

Grant close out requires you met the compliance requirements and make any final grant budget revisions.  You will want to make sure you make any budget revisions in a timely manner to make sure you have time for any grant budget revision approval that is required.

Your accounting system should be able to meet your grantor reporting needs including their budget line items.   This typically requires segment tracking to track your grant as a separate fund including tracking by program.

Some examples of lack of effective grants management would include grant findings, monitoring visit finding, spending issues, and lack of a grant budget and related projections.  Have you had a loss of funding, suspension, or termination of any of your grants.  Have you had to submit a corrective action plan for your grant?  Have you properly performed the grant closeout procedures?

It is important that you continue to strive for effective grants management within your organization.  Our firm is here to help your organization perform more effective grants management so please let us know if we can be of assistance.