1. Quality SEFA Prep What Auditees Should Know
Brian Hemmerle, CPA, CFE
May 2019

2. Brian J. Hemmerle, CPA, CFE
About Your Presenter
Henry+Horne, Senior Manager, Governmental Services
Graduated from the University of Arizona
Certified Public Accountant and Certified Fraud Examiner
Experience in Municipalities, School Districts, State Agencies, Nonprofits and Industry
Treasurer, Board of Directors for Girl Scouts Arizona Cactus Pine Council
Member of the AICPA, ASCPA, GFOA, GFOAz and AASBO
GFOA Special Review Committee Member
Brian J. Hemmerle, CPA, CFE

3. Today’s Topics Schedule of Expenditures of Federal Awards
What it is
How to prepare the SEFA
Common SEFA Deficiencies
Breakout Session
Reporting Requirements

4. Schedule of Expenditures of Federal Awards

5. Schedule of Expenditures of Federal Awards
Uniform Guidance:
Auditee is responsible for the SEFA (Sections , (b), (c)). The SEFA is a separate financial statement. You own it.
SEFA content is essential to determining major programs and identifying applicable audit requirements.
Lack of or ineffective internal controls over SEFA preparation is a significant deficiency and, depending on the severity of the problems, a material weakness.

6. Schedule of Expenditures of Federal Awards
Significant Deficiency: A control deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Material Weakness: A control deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the organization’s financial statements will not be prevented, or detected and corrected on a timely basis.

7. Schedule of Expenditures of Federal Awards
Prepared by management ( ).
Includes all expenditures from all federal financial assistance.
Reconciles to the general ledger.
Completeness is critical to avoid missed programs.

8. Schedule of Expenditures of Federal Awards
Information to gather:
Grant title
Federal program name
Award number
Federal agency
CFDA number (cfda.gov)
Pass-through entity and award number
Identify if non-cash, R&D or ARRA

9. Schedule of Expenditures of Federal Awards
Programs listed by federal agency
For R&D, list subdivisions with the agency or individual award
Example: National Institute of Health is a subdivision of Department of Health and Human Services
CFDA for each program
Clusters
Total amount for each individual federal program
Name and identifying numbers of pass-through awards

10. Schedule of Expenditures of Federal Awards
Notes should include:
Significant account policies used to prepare the SEFA and basis of accounting.
The amount of loans or loan guarantees outstanding at year end.
The amount of insurance in effect during the year.

11. Schedule of Expenditures of Federal Awards
Grant managers should gather and summarize data.
Know the requirements of each grant.
Document policies, procedures and internal controls.
Analysis completed to determine if a vendor relationship exists.

12. Schedule of Expenditures of Federal Awards
How do I know if I’m a vendor or a subrecipient ( )
Subrecipients perform part of the program activities
Report on SEFA
Vendors/Contractors provide goods or services in support of project activities
Do not report on SEFA
An auditee may simultaneously be a recipient, subrecipient and a vendor.

13. Schedule of Expenditures of Federal Awards
Examples of federal assistance may be:
Grants + Contracts
Interest subsidies
Program Income
Non-cash assistance
Loans

14. Schedule of Expenditures of Federal Awards
Examples of federal assistance may be:
Grants + Contracts
Cost reimbursements
Coop Agreements
Direct appropriations
Amounts passed-through to subrecipients
When the disbursement is made to the sub
When expense occurs

15. Schedule of Expenditures of Federal Awards
Examples of federal assistance may be:
Interest subsidies – When amounts are disbursed to you
Program Income – When you receive the income

16. Schedule of Expenditures of Federal Awards
Examples of federal assistance may be:
Non-cash assistance
Food commodities – When you distribute food or use food
Property donated – When you receive the property
Insurance – When the insurance is in force
Endowment funds – When federally restricted amounts are held
Free Rent – In the period the rent covers

17. Schedule of Expenditures of Federal Awards
Value of Non-Cash assistance
Food commodities – Fair Value at time of receipt or assessed by federal government
Property donated – Fair Value at time of receipt or assessed by federal government
Insurance - Fair Value of contract at time of receipt
Endowment funds – Value of cumulative balances of federally restricted amounts
Free rent – Fair Value at time of receipt or assessed by federal government

18. Schedule of Expenditures of Federal Awards
Examples of federal assistance may be:
Loans and loan guarantees
New loan proceeds spent
Beginning balance of previous loans (if continuing compliance required)
Interest and subsidies

19. Schedule of Expenditures of Federal Awards
What is a continuing compliance requirement loan?
Section (d)
Loans, the proceeds of which were received and expended in prior years, are not considered Federal awards expended under this part 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.
Basically, if you are required to make sure the item(s) purchased with the proceeds is used for certain purposes or eligible individuals.

20. Common SEFA Deficiencies

21. Common SEFA Deficiencies
Incorrect/missing CFDA numbers
Names of pass-through entities omitted
Missing pass-through contract number
Federal agency names missing
Clusters not shown as such
Notes to SEFA missing or reference on SEFA missing
Non-cash awards missing
Improper basis for determining when awards expended
Improper reporting of loans
Subtotals missing for CFDA, federal agency, clusters, or totals

22. Common SEFA Deficiencies
Incorrect CFDA numbers

23. CFDA Numbers?
How do I verify my CFDA numbers?

24. CFDA Numbers? What if I don’t know my CFDA number?
Inquire with pass-through or granting agency
Read through application and/or award
Still can’t find it?
Start with the agency’s 2 digit prefix followed by a U followed by a two digit number (e.g. U01, U02, etc.) in the extension field.

25. Common SEFA Deficiencies
Grantor federal agency names missing

26. Common SEFA Deficiencies
Missing names of pass-through entities

27. Common SEFA Deficiencies
Multiple lines for CFDA numbers shown – total expenditures for CFDA number not shown

28. Common SEFA Deficiencies
Subgrant award numbers not included

29. Common SEFA Deficiencies
Program(s) that are part of a cluster not shown as such

30. Clusters? How do I know if I have any clusters in my SEFA?
Use the Matrix of Compliance Requirements in the most recent Compliance Supplement.
Each cluster is treated as one program for major program determination and testing by your auditors.
Compliance Supplement Part 5 is also used as a tool for clusters.

31. Common SEFA Deficiencies
Notes to SEFA missing
NOTE 1     BASIS OF PRESENTATION
The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal award activity of the Town of Someplacen, Arizona (Town) under programs of the federal government for the year ended June 30, The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Town, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Town.

32. Common SEFA Deficiencies
Notes to SEFA missing
NOTE 2     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.

33. Common SEFA Deficiencies
Notes to SEFA missing
NOTE 3     INDIRECT COST RATE
The Town has/has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance.

34. Breakout Session

35. Breakout Session Break into groups of 3-4 Time allotted: 5 minutes
Using the handout SEFA:
Circle errors
Highlight corrections
Write-in omissions
Time allotted: 5 minutes

36. Reporting Requirements

37. Reporting Requirements
The auditee is responsible for filing the reporting package and data collection form with the Federal Clearinghouse.
Submission to the Clearinghouse is done online at:

38. Reporting Requirements
What is required to be submitted?
Financial statements
Schedule of Expenditures of Federal Awards
Schedule of Findings and Questioned Costs
Corrective Action Plan (if findings)
Summary Schedule of Prior Audit Findings

39. Reporting Requirements
Also included:
Opinion of Financial Statements
Opinion on SEFA
Report on Internal Control for both GAS and Uniform Guidance
Report on Compliance for both GAS and Uniform Guidance

40. Reporting Requirements
The data collection form is an electronic template completed on the Clearinghouse’s website that includes information from your SEFA.
Needs to be electronically certified by both the auditor and auditee.

41. Reporting Requirements
The reporting package and the data collection form is required to be submitted nine months after fiscal year end or 30 days after receipt of the auditor’s report, whichever is earlier.

42. Recap Schedule of Expenditures of Federal Awards Compliance
Common SEFA Deficiencies
Breakout Session
Reporting Requirements

43. Questions?

44. Thank you! Contact us Brian Hemmerle (480) 839-4900 Ext. 304