Internal Control Tip: The Schedule of Expenditures of Federal Awards

Don’t Overlook the Schedule of Expenditures of Federal Awards

Federal programs assist school districts and charter schools to carry out supplemental programs for its students. Without some of these federal grants, schools would not be able to speak about student success stories.

We place a great deal of effort in applying for the funds and executing programs, but reporting the revenues and expenditures sometimes falls by the wayside. In fact, we forget that reconciling the Schedule of Expenditures of Federal Awards (SEFA) is a key control in any organization that receives and spends federal funding. The truth is, the SEFA is one of the most important documents that is submitted with your annual financial audit when your entity is subject to the Single Audit Act (i.e. your entity spent $750,000 or more in federal programs). State agencies such as the Texas Education Agency (TEA), Texas Department of Agriculture (TDA) and the Texas Health and Human Services Commission (THHSC) review the SEFA to ensure that the amounts reflected agree to their agencies’ records.

Moreover, external auditors need to gain a comfort level that the SEFA is correct. Should it be incorrect, there is risk of audit failure. When this is the case, the grantor will require that auditors re-assess their major program determination and audit the missed program. It should be noted that both state and federal agencies can determine if an auditor missed a major federal program by recalculating the auditors’ major program determination using the Federal Audit Clearinghouse’s Data Collection Form, which is populated using the entity’s SEFA. We don’t want any grantor casting doubt on an entity’s ability to properly account for its federal programs.

These admonitions may sound like the sky is falling (or could fall), but as always, the following list will assist in preparing a complete and accurate SEFA:

  1. The total SEFA reconciles to the total federal revenue codes for all funding sources (i.e. object codes 59xx) less any non-federal assistance such as the School Health and Related Services (SHARS) and E-Rate.
  2. Both direct and indirect costs by federal program are included.
  3. The indirect cost rate is the proper rate approved by the Texas Education Agency, whether it is the Restricted or Unrestricted Rate.
  4. Amounts reflected in the SEFA do not exceed the Notice of Grant Award (NOGA).
  5. All clusters are properly identified. These include, but are not limited to, the Child Nutrition Cluster (National School Lunch Program, School Breakfast Program and Summer Feeding Program) and the Special Education Cluster (IDEA Part B, Formula and Preschool).
  6. All federal programs reflect the proper Catalog of Federal Domestic Assistance (CFDA) # based on the Notice of Grant Award or grant agreement.
  7. The pass-through identification number is correct. Grantors mean business when they provide an entity with an identification number. For starters, the TEA’s Payment Report is a great resource to verify the identification numbers passed through by TEA.

 

Whitley Penn contributes to the TASBO Internal Control Tips at www.tasbo.org/IC-Tips

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