Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards Subpart F require all higher education institutions that receive and expend federal assistance totaling $750,000* or more during the entity’s fiscal year to have an annual audit performed by an independent (external) auditor. The single audit reporting package (including the audit report) must be submitted to the Federal Audit Clearinghouse (FAC) within 30 days after the institution receives its audit report or nine (9) months after the entity’s fiscal year-end.
Audit criteria is established by the Compliance Supplement, which identifies existing compliance requirements that the federal government expects to be considered as part of an audit. Use of the Compliance Supplement by the auditor is mandatory and updated annually to reflect changes and additions to program requirements.
Single audit objectives
Objectives of the single audit may include the following:
- Financial statements: determine whether financial statements of the entity are presented fairly in all material respects and in accordance with Generally Accepted Accounting Principles (GAAP)
- Compliance: determine whether the auditee has complied with federal statutes, regulations, guidelines and terms and conditions of the federal award that may have a direct and material effect on each of the entity’s major programs
- Internal controls: gain a sufficient understanding of internal controls over federal programs to justify and support a low assessed risk of noncompliance for all major programs
While not a main objective, stakeholders will use the single audit to determine risks of subrecipients, per Uniform Guidance 2 CFR 200.332. For additional information on use of the single audit to determine subrecipient risks, read our recent insight, Conducting pre-award subrecipient risk assessments.
Schedule of Expenditures of Federal Awards (SEFA)
The Schedule of Expenditures of Federal Awards (SEFA) is a financial statement prepared by an entity to report total federal expenditures during the fiscal year, including amounts where the entity is the prime entity and funds passed through to sub-recipients. Not only is the SEFA a required component of the single audit reporting package submitted to the FAC, but also a document used by the external auditor to determine major programs. Auditors used a risk-based approach to identify which programs are required to be reviewed within the single audit. This approach includes identifying major programs, which, for many non-research-intensive institutions, will include financial aid.
Expenditures on the SEFA are reported by cluster (e.g., program, school, department, etc.) with a subtotal for each cluster and a breakdown by the agency/sponsor. The following elements are necessary to prepare the SEFA:
- Type of award (grant or contract)
- Reimbursement basis (cost or fixed)
- Name of direct sponsor (federal funding agency or pass-through entity as appropriate)
- Assistance listing number and associated federal program name
- Applicable cluster assignment for each award
- For pass-through awards, award ID assigned by the sponsor
- Total federal expenditure
- Total passed through to subrecipients
Is your institution ready for its single audit?
We can assist your institution in navigating the varying complexities of preparing for its annual single audit through a single audit readiness review or assessment.