Building the SEFA: Assistance Listing Numbers, Clusters and Federal Loans

The schedule of expenditures of federal awards (SEFA) is the document every other Single Audit decision depends on. The auditor's threshold test, the major program determination and the reporting package all start from it. If the SEFA omits a program, mislabels a cluster or misses a loan balance, the errors travel into the audit.

This guide covers the structure the regulation requires and the recording rules for loans. It paraphrases 2 CFR 200.510 and 200.502. The general walkthrough is in the SEFA preparation guide; this post focuses on identification and classification.

What 2 CFR 200.510 requires on the face of the schedule

Under 2 CFR 200.510(b), the SEFA lists individual federal programs by federal agency. For each, it shows:

• The Assistance Listing number or numbers.
• Total federal awards expended for each individual program.
• The amount passed through to subrecipients.
• For awards received as a subrecipient, the name of the pass-through entity and the identifying number the pass-through entity assigned.
• For clusters of programs, the cluster name, the list of individual federal programs within the cluster with their agency names and Assistance Listing numbers, and the total for the cluster.

The identifying number from the pass-through entity is easy to miss, because the auditee's own records usually key on the award agreement. Ask for the subaward document, not the invoice, when you collect the data.

Assistance Listing numbers

An Assistance Listing number is the catalog identifier for a federal program. A single grant agreement can cover more than one listing number, and one program can arrive under several awards.

Build the schedule from the award documents:

1. List every federal award agreement and subaward received or active during the audit period, including awards with zero expenditures in the year when they carry continuing compliance requirements (see the loan rules below).
2. Record agency, program title, Assistance Listing number, award or subaward number and, for subawards, the pass-through entity and its number.
3. Reconcile the awards listed to the general ledger by grant code or fund, so that expenditures on the schedule agree with the accounting records.
4. Confirm the program title against the listing number. A wrong digit changes the program, and the major program determination follows the number.

If an Assistance Listing number is not on the award document, ask the funding agency or pass-through entity for it before the report is issued, and keep the response in the file.

Clusters

A cluster is a group of closely related programs that share common compliance requirements. Under the 2 CFR 200.1 definition, research and development and student financial aid are clusters, and "other clusters" are those OMB defines in the Compliance Supplement or a state designates for awards it passes to subrecipients. The SEFA must show a cluster as a unit, because a cluster is treated as one program when major programs are determined. Per 2 CFR 200.510(b), the schedule gives the cluster name, lists the individual programs and totals the cluster.

To classify, take the program list and compare each program against the cluster list in the Compliance Supplement for the period, plus any state-designated cluster the pass-through entity identified. Cluster membership changes over time, so use the supplement that applies to the audit period, not the prior-period working paper. Then place each program in its cluster, total the cluster and carry the cluster total, not each program total, into the risk-based major program analysis. The major program determination guide shows how the totals are used.

Federal awards expended: the basis rules

Whether a transaction belongs on the schedule is set by 2 CFR 200.502. Loans, insurance, endowments, free rent and noncash items each follow a special rule.

Loans and loan guarantees

The regulation states that the federal government is at risk for loans until the debt is repaid. The consequences for the SEFA:

• The amount of new loans made during the audit period counts as expended.
• The balance of loans from prior years that still carry continuing compliance requirements counts, even if no new money was lent.
• Any interest subsidy, cash or administrative cost allowance received during the period counts.
• Under 2 CFR 200.510(b), the notes identify the loan and loan guarantee balances outstanding at the end of the audit period.

A revolving loan fund shows the pattern. The auditee made no new loans in the period, but the portfolio still carries federal compliance requirements. The beginning-of-year balance counts as federal awards expended on the schedule, and the end-of-year balance belongs in the notes. The auditor should obtain the loan subledger and tie it to both figures.

Two exceptions narrow the loan rule. Loans whose proceeds were received and spent in prior years drop out when the terms impose no continuing compliance requirement other than repayment. At an institution of higher education that makes loans to students with no continuing compliance requirement of its own, only loans made during the audit period count.

Insurance and endowments

Insurance provided under a federal program counts as expended for the period when the insurance is in force. The cumulative balance of federal awards for endowment funds that are federally restricted counts as expended in each period during which the funds remain restricted.

Free rent and noncash assistance

Free rent received by itself is not a federal award expended under Part 200. It counts only when it is part of a federal award that provides financial support to a federal program. Noncash assistance is valued at fair market value at the time of receipt or at the assessed value provided by the federal agency. Those items are treated in a separate guide on noncash assistance and the de minimis rate note.

Reconciliation and review steps

Before the SEFA goes to the auditor:

1. Tie total federal expenditures on the schedule to the revenue recognized from federal sources in the financial statements. Differences, such as timing of recognition or unspent advances, need a reconciliation.
2. Tie each program to a grant code or fund in the ledger.
3. Confirm pass-through entities and identifying numbers against the subaward documents.
4. Confirm the amounts passed through to subrecipients to the subrecipient payment records.
5. Confirm loan balances to the subledger and to the lender's records.
6. Confirm the cluster list against the Compliance Supplement for the audit period.

The auditor's responsibility is to determine whether the SEFA is fairly stated in relation to the financial statements as a whole, which means these reconciliations form part of the audit evidence rather than a client convenience.

Related reading

The Uniform Guidance standards page places the SEFA within the full regulation, and the Single Audit threshold page covers the test the schedule supports.

CORAA prepares ready-to-review audit files for US CPA firms, including the grant-to-ledger reconciliations that support a SEFA. The firm keeps the client, the review and the signature. See /us.

Sources

• Legal Information Institute, 2 CFR 200.510, Financial statements: https://www.law.cornell.edu/cfr/text/2/200.510
• Legal Information Institute, 2 CFR 200.502, Basis for determining Federal awards expended: https://www.law.cornell.edu/cfr/text/2/200.502
• Legal Information Institute, 2 CFR 200.1, Definitions (cluster of programs): https://www.law.cornell.edu/cfr/text/2/200.1

AU-C references are to AICPA Professional Standards, paraphrased here; read the standard itself before relying on a requirement. This page is guidance, not professional advice. Report an error