What Is a Schedule of Expenditures of Federal Awards?

A Schedule of Expenditures of Federal Awards (SEFA) is a detailed financial statement prepared by non-federal entities that spend federal funds. Its purpose is to provide a comprehensive summary of an entity’s spending of federal grant money during its fiscal year. This schedule allows federal agencies to track how their funds are used and to ensure the money is spent in accordance with program requirements.

The SEFA is a supplementary schedule that accompanies an entity’s main financial statements. Its creation is a component of a specific compliance engagement known as a Single Audit. By listing all federal funds an organization has expended, the schedule provides a consolidated picture of its federally funded activities.

When a SEFA is Required

The requirement to prepare a SEFA is established by the Uniform Guidance, codified under 2 U.S. Code of Federal Regulations Part 200. This guidance mandates a Single Audit, which includes a SEFA, for any non-federal entity that expends $750,000 or more in federal awards during its fiscal year. This rule applies to a wide range of organizations, including state and local governments, nonprofit organizations, and institutions of higher education that receive federal financial assistance.

Expenditures are broadly defined to include more than direct cash spending. The total encompasses all federal financial assistance used during the period, including direct costs, allocated indirect costs, and the value of non-cash assistance like donated property. It also includes funds an entity receives and passes through to another organization, known as a subrecipient. The sum of these expenditures determines if the $750,000 threshold has been met.

An update to the Uniform Guidance increases the expenditure threshold to $1 million for entities with fiscal years beginning on or after October 1, 2024. This change will alter which entities are required to undergo a Single Audit and prepare a SEFA. Organizations must track their federal expenditures to determine if they are subject to the reporting requirements for their fiscal period.

Information Required for the SEFA

Compiling the necessary information requires tracking all federal funding streams. The Uniform Guidance specifies several data elements that must be presented for each federal award, beginning with the name of the federal department or agency that provided the funds, such as the U.S. Department of Education.

The SEFA must also list the official name of the federal program and its unique five-digit identifier, the Assistance Listings Number (ALN). This number, formerly the Catalog of Federal Domestic Assistance (CFDA) number, must be accurately reported. The ALN ties expenditures to the correct federal program for oversight purposes.

If an organization receives federal funds indirectly through an intermediary, that provider is known as a pass-through entity. The SEFA must disclose the name of this pass-through entity and include the specific award number it assigned.

For each federal program, the schedule must report the total dollar amount of awards expended during the fiscal year, a figure derived from the organization’s accounting records. A separate amount must be shown for the portion of those expenditures that the entity passed through to subrecipients. This distinction is important for auditors to assess risk and determine the scope of their testing.

Preparing the SEFA Document

The SEFA is organized in a columnar format that lays out the specified information for each federal award. The schedule is structured to group awards together by the federal agency that provided the funding. Within each agency grouping, individual awards are then listed in ascending order by their Assistance Listings Number (ALN).

Certain related federal programs are treated as a single unit for audit purposes and are known as “clusters.” The Uniform Guidance lists which programs must be clustered. On the SEFA, programs that form a cluster should be grouped together with a subtotal for the cluster’s total expenditures.

The SEFA must have accompanying notes that disclose the significant accounting policies used, such as the basis of accounting (cash or accrual). The notes must also disclose if the value of non-cash assistance is included. If applicable, the entity must state whether it has elected to use the 15% de minimis indirect cost rate.

After listing all awards and clusters, the total expenditures for all federal awards must be calculated and presented at the bottom of the schedule. This final number is the figure used to determine if the Single Audit threshold was met. The entire schedule, including its notes, becomes part of the supplementary information accompanying the entity’s audited financial statements.

The SEFA’s Role in the Single Audit

The completed SEFA is a tool used by independent auditors to plan and conduct the Single Audit. Auditors use it to gain an understanding of the entity’s federal award landscape for the fiscal year. The schedule’s listing of programs and expenditures guides the auditors’ assessment of risk and the selection of programs for testing.

Auditors use the SEFA to perform a risk-based analysis to identify “major programs” for testing. This determination involves both quantitative and qualitative factors, such as program size, prior audit findings, and program complexity. Major programs are subjected to rigorous compliance testing to ensure the entity adhered to federal rules and award terms.

After the audit, the SEFA is included as part of the Single Audit reporting package. This package, which also contains the entity’s financial statements, auditor’s reports, and a schedule of findings, is submitted to the Federal Audit Clearinghouse (FAC). The submission is done electronically using Form SF-SAC. The FAC serves as a public repository for Single Audit reports, making the results accessible to federal agencies and the public.