The SEFA and how to measure federal awards expended

In this lesson you will

Measure federal awards expended under 2 CFR 200.502 for grants, loans and noncash assistance
Identify the required SEFA content in 200.510(b)
Exclude items that are not federal awards expended, such as Medicare payments
Plan the in-relation-to procedures for the SEFA

Why the SEFA drives everything

The schedule of expenditures of federal awards is the population for the whole compliance audit. It sets the threshold test, the Type A threshold, the list of programs you risk-assess and the 40 or 20 percent coverage denominator. An error in the SEFA is an error in major program determination. The auditor must also determine whether the SEFA is stated fairly in all material respects in relation to the financial statements as a whole (200.514(b)).

Measuring expenditures under 200.502

The determination of when an award is expended is based on when the activity related to the award occurs (200.502(a)). The regulation lists the events that count, including expenditure or expense transactions under grants and cost-reimbursement contracts, disbursements to subrecipients, use of loan proceeds, receipt of property, receipt or use of program income, distribution or use of food commodities, and the period when insurance is in force.

The special rules are where files go wrong:

Loans and loan guarantees (200.502(b)). Count the value of new loans made or received during the year, plus the beginning balance of loans from previous years for which the federal government imposes continuing compliance requirements, plus any interest subsidy, cash or administrative cost allowance received.
Prior loans with no continuing compliance (200.502(d)). If the only remaining requirement is repayment, the balance is not federal awards expended.
Student loans at institutions of higher education (200.502(c)). If the institution has no continuing compliance requirements, count only loans made during the period.
Endowments (200.502(e)). The cumulative balance of federally restricted endowment funds counts each year the funds stay restricted.
Noncash assistance (200.502(g)). Value at fair market value at receipt or the assessed value provided by the federal agency.
Free rent (200.502(f)). Counts only when received as part of a federal award to carry out a program.
Medicare (200.502(h)). Payments for patient care are not federal awards expended. Medicaid payments to a subrecipient for patient care are excluded unless a state requires cost-reimbursement treatment (200.502(i)).

What the SEFA must show

200.510(b) requires the SEFA to cover the same period as the financial statements and to:

List individual federal programs by federal agency with the Assistance Listing number; for clusters, give the cluster name, the programs in it and their numbers.
For awards received as a subrecipient, name the pass-through entity and its identifying number.
Give total federal awards expended for each program and, for clusters, the cluster total.
Include the total amount provided to subrecipients from each program.
For loan programs, disclose balances outstanding at year-end in the notes.
Include notes describing significant accounting policies and whether the auditee elected the de minimis indirect cost rate of up to 15 percent (see 200.414).

Research and development may be shown by individual award or by federal agency and major subdivision. See the SEFA guide and the Assistance Listings and clusters guide.

Auditing the SEFA

Practitioners reconcile the SEFA to the general ledger, grant revenue and receivables, and drawdown records; agree a sample of program totals to award documents; check Assistance Listing numbers and cluster groupings against the Compliance Supplement Part 5 list; and confirm pass-through identifiers. Timing differences between expenditure recognition and revenue recognition need explanation, especially for reimbursement grants recorded on a different basis.

Common file mistakes

Programs that belong to a cluster listed separately, which changes the Type A test.
Loan programs reported at new loans only when continuing compliance requirements keep prior balances in scope.
Noncash assistance such as donated vaccines or commodities omitted.
No subrecipient column, or amounts that do not tie to subaward disbursements.
No note on the de minimis rate election.

The noncash assistance and de minimis disclosure guide has illustrative note language.

Worked example

Cedar Valley Health Clinic: building the SEFA total

Cedar Valley Health Clinic, a nonprofit with a December 31, 2025 year-end, reports these federal items:

Item	Amount	Counted?
Health center grant expenditures	$650,000	Yes, expense transactions (200.502(a)(1))
Federal loan for a facility, balance at January 1, 2025, with continuing use restrictions	$2,000,000	Yes, beginning balance with continuing compliance (200.502(b)(2))
Interest subsidy received on that loan	$40,000	Yes (200.502(b)(3))
Donated vaccines, fair value at receipt	$120,000	Yes, noncash assistance (200.502(g))
Medicare patient care payments	$3,000,000	No (200.502(h))

Federal awards expended = $650,000 + $2,000,000 + $40,000 + $120,000 = $2,810,000.

Calendar 2025 began after October 1, 2024, so the $1,000,000 threshold applies and a single audit is required. The loan program alone, at $2,040,000, is the largest program on the SEFA. The notes must disclose the $2,000,000 less any principal repaid as the outstanding balance at December 31, 2025. Had the clinic left out the $2,000,000 loan balance, total expenditures would have been $810,000 and the clinic would have wrongly concluded it was exempt.

Self-check

Answer each question before you open the answer.

A nonprofit has a federal loan received five years ago. The only remaining requirement is repayment. Is the balance federal awards expended?
Show answer
No. Under 2 CFR 200.502(d), prior loans with no continuing compliance requirements other than repayment are not federal awards expended.
What must the SEFA show for awards received as a subrecipient?
Show answer
The name of the pass-through entity and the identifying number it assigned (200.510(b)(2)), along with the program, Assistance Listing number and expenditures.
A hospital receives $8 million of Medicare payments for patient care. How do they affect the single audit threshold?
Show answer
They do not. 200.502(h) states that Medicare payments for patient care are not federal awards expended.
What opinion-level conclusion does the auditor reach on the SEFA?
Show answer
Whether it is stated fairly in all material respects in relation to the financial statements as a whole (200.514(b) and 200.515(a)). It is an in-relation-to conclusion, not a standalone opinion.

Sources

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Standards are paraphrased from the primary sources listed above; read the source before relying on a requirement. This lesson is training material, not professional advice. Report an error