1. UT-Arlington Accounting CPE Day August 13, 2014 SEFA Preparation and Subrecipient Monitoring

2. Schedule of Expenditure of Federal Awards (SEFA) OMB Circular A-133 states: – Auditee should prepare the SEFA – Auditor should: Determine whether the SEFA is presented fairly in all material respects in relation to the financial statements as a whole Issue a report on the SEFA 2

3. Award amount Grant title Federal program name Award number Federal agency Catalog of Federal Domestic Assistance (CFDA) Number Award period Extensions or amendments to the grant? Is the grant for research and development? Name of pass-through agency and number 3 Identify Federal Programs

4. Pass-through Entities Required to separately identify to each subrecipient, through documentation at the time of the subaward and upon each disbursement of funds – Federal award number – CFDA number – Amount of Recovery Act funds 4

5. Schedule Requirements The period covered by the schedule should be the same as that covered by the financial statements Federal programs listed individually by federal agency The CFDA number or other identifying number when CFDA number is unavailable Name of pass-through entity and identifying number assigned by the pass-through entity (if applicable) 5

6. Schedule Requirements Notes describing the significant accounting policies used in preparing the schedule Total amount provided to subrecipients from each federal program (applies only to pass-through entities) Total federal awards expended during the period for each program The value of the federal awards expended in the form of noncash assistance, the amount of insurance in effect during the year, and loans or loan guarantees outstanding at yearend 6

7. SEFA Minimum Information 7

8. Notes to the SEFA 8

9. Nonfederal Awards To meet state or other requirements, an auditee may include nonfederal awards, however, they should be segregated and clearly designated as nonfederal The title of the schedule should be modified to indicate that nonfederal awards are included Auditor’s report should reference the correct title Nonfederal awards may be included in a separate schedule (ex. Schedule of Expenditures of State Awards) 9

10. American Recovery and Reinvestment Act Expenditures of Recovery Act funds should be separately identified on the schedule and include the prefix “ARRA-” with the name of the federal program 10

11. Optional But Recommended Info As a general rule, the more information provided in the schedule, the fewer the follow-up call from federal agencies Where the same program (e.g., same CFDA #) from different program years may be combined and reported on one line, where feasible, presenting each program year separately makes the schedule more useful to grantors 11

12. Optional But Recommended Info It may be desirable to include a note to the schedule reconciling to the amounts shown by the grantor. Include in the schedule or disclose in the notes any interest subsidy or administrative costs allowance received under federal loan or loan guarantee programs When unable to determine the federal portion of a contract or grant agreement, report the entire amount as federal and explain why in a note disclosure 12

13. Optional But Recommended Info Amount of the program award and time period of the award Matching contributions Receipts or revenue recognized Beginning and ending balances (unexpended amounts or accrued revenue) Individual contract and grant numbers and amounts Program income 13

14. Common Deficiencies in the SEFA Schedule did not: – Reconcile to the financial records – Indicate whether awards were direct or pass-through – Clearly indicate total federal expenditures and/or federal expenditures by program – Contain required information related to the federal agency and pass-through entities, including CFDA number or other identifying number 14

15. Common Deficiencies in the SEFA Schedule did not: – Disclose the basis of accounting used Schedule had inadequate notes (and sometimes no notes) Audit documentation did not indicate what procedures were performed related to the SEFA Auditor failed to modify opinion when SEFA was missing information 15

16. Report on National Single Audit Sampling Project Subgrant award numbers assigned by pass-through were not included in the schedule Names of the pass-through entities, grantor federal agencies or subdivisions were missing Multiple lines for CFDA numbers were shown but not totaled Programs that were parts of a cluster were not shown as such 16

17. Report on National Single Audit Sampling Project Notes to the schedule were missing Correct CFDA number was not reported Research and development (R&D) programs were not identified as such 17

18. Subrecipient Monitoring Pass-through entity assume responsibility for complying with federal requirements when it accepts federal awards Federal agencies hold the pass-through entity ultimately responsible for compliance at the subrecipient level Pass-through entity is responsible for informing subrecipient of applicable requirements as well as identifying the source of funding and any additional administrative requirements imposed on the subrecipient 18

19. Responsibilities of Pass-through Entities Identify federal awards made by informing each subrecipient of CFDA title and number, award name and number, award year, if the award is R&D, and name of federal agency. When some of this information is not available, the pass- through entity shall provide the best information available to describe the federal award 19

20. Responsibilities of Pass-through Entities Advise subrecipients of requirements imposed on them by federal laws, regulations, and the provisions of contracts or grant agreements as well as any supplemental requirements imposed by the pass- through entity Monitor the activities of subrecipients as necessary to ensure that federal awards are used for authorized purposes and that performance goals are achieved 20

21. Responsibilities of Pass-through Entities Ensure that subrecipients expending $500,000 or more in federal awards during the subrecipient's fiscal year have met the audit requirements of Circular A-133 for that fiscal year Issue a management decision on audit findings within six months after receipt of the subrecipient's audit report and ensure that the subrecipient takes appropriate and timely corrective action 21

22. Responsibilities of Pass-through Entities Consider whether subrecipient audits necessitate adjustment of the pass-through entity's own records Require each subrecipient to permit the pass-through entity and auditors to have access to the records and financial statements as necessary for the pass-through entity to comply with Circular A-133 Maintain the subrecipient's report submissions (or other written notification when the subrecipient is not required to submit a reporting package) on file for three years from the date received 22

23. Final Grant Reform Guidance Issued December 2013, OMB released final guidance on administrative requirements, cost principles, and audit requirements for federal awards Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Supersedes and streamlines eight OMB circulars into one document Audit requirements will be effective for Single Audits of years beginning on or after January 1, 2015 (December 31, 2015, year-end Single Audits) Other requirements will affect federal awards and funding drawdowns made on or after January 1, 2015. 23

24. Raising the Single Audit threshold to $750,000 Raising the minimum threshold for Type A/B program determination to $750,000 Changing the high-risk program criteria for Type A programs Reducing the number of high-risk Type B programs that must be tested as major programs Revising the Type B small program floor Reducing the percentage of coverage requirement to 40% for normal auditees and 20% for low-risk auditees Revising the criteria for low-risk auditee status Referring to the compliance supplement for identification of principle compliance requirements Increasing the threshold for reporting findings to $25,000 in questioned costs. In addition, more detailed information will be reported. 24 Principal Single Audit Process Changes

25. lupe.garcia@whitleypenn.com 713-621-1515 Guadalupe R. Garcia, CPA