Update Your SEFA to Accommodate Uniform Guidance Changes

In preparation for your next financial reporting cycle, you’ll need to consider updating your schedule of expenditures of federal awards (SEFA). A few changes to the presentation are required by the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (uniform guidance). These changes are effective for financial statement audits of fiscal years beginning on or after December 26, 2014.

Note that making these changes to your organization’s SEFA isn’t a substitute for reading and understanding the requirements of uniform guidance itself, which may require substantive changes to your organization’s processes and controls surrounding federal awards. (See our uniform guidance page for more.)

Presentation Requirements

The following items are now required to be presented on the face of the SEFA as opposed to in the notes to the SEFA:

  • Amounts provided to subrecipients from each federal program
  • Loan programs (loans outstanding at the beginning of period plus loans disbursed during the period
  • Loan guarantee programs
  • Noncash assistance (free rent, food commodities, and donated property, for example)
  • Total for each cluster of programs

It’s important to note for the last item that while auditees may have grouped the cluster in the past, it’s important to include a cluster total dollar amount as well.

Additional changes to notes to the SEFA resulting from implementation of the uniform guidance include:

  • Disclosing whether you’ve elected to use the 10 percent de minimis indirect cost rate
  • Year-end loan balances
  • Updating information in your basis of presentation and significant accounting policy disclosures to reference the uniform guidance

Loan or Loan Guarantee Programs

Loan or loan guarantee programs create unique reporting requirements on the SEFA. Here’s additional information to consider while preparing the SEFA under the uniform guidance:

  • Expenditures. The amount reported on the face of the SEFA should equal the value of new loans made or received during the audit period plus the beginning of the audit period balance of outstanding loans from previous years for which the federal government imposes continuing compliance requirements. It also includes any interest subsidy, cash, and administrative cost allowance received.

    The proceeds of loans received or expended in prior years aren’t considered federal awards expended under the uniform guidance when the federal statutes, regulations, and the terms and conditions of federal awards pertaining to such loans impose no continuing compliance requirements other than to repay the loans.
  • Student loans. Institutions of higher education often participate in certain loan and loan guarantee programs—the Federal Family Education Loan Program and the Federal Direct Loan Program, for example. When loans are made to students but the institution of higher education doesn’t make the loans, the uniform guidance requires only that the value of the loans made during the year be considered federal awards expended in that year. Those loans and loan guarantees are required to be reported on the face of the schedule, according to the uniform guidance.

The American Institute of Certified Public Accountants’ Governmental Audit Quality Center is in the process of updating its SEFA tools for auditees, including a SEFA checklist you can complete to ensure you’ve included all the correct information.

The Office of Management and Budget (OMB) is also working on an update to the data collection form (DCF), applicable for audits of periods subject to the uniform guidance audit requirements, to collect the information required to be reported under the uniform guidance. To save time in preparing your DCF, you may want to consider formatting your SEFA in a manner in which it can be easily uploaded to the Federal Audit Clearinghouse when preparing your DCF—including the name of pass-through entities in a column, for example, instead of in a row within the SEFA.

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Moss Adams LLP will issue another Alert when OMB makes available the updated data collection form. In the meantime, contact your Moss Adams professional for questions on how these changes will impact your SEFA.

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