Single Audit – Get off to a Good Start with an Error Free SEFA

By Diane E. Edelstein, CPA

The Uniform Guidance (2 CFR Chapter 1, Chapter II, Part 200, et al. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards) is the standard that both Auditors and Auditees must follow when a Single Audit is performed.

The first step in preparing the Single Audit is developing the Schedule of Expenditures of Federal Awards (SEFA), which is the auditees’ responsibility. There have been numerous errors noted by Peer Reviewers and Inspector General auditors connected to the SEFA. If these errors can be identified sooner or prevented in the first place, the Single Audit reporting will proceed more smoothly.

The Major Program Determination (MPD) is performed by the auditor and is based on the amounts in the SEFA. If the amounts used to do the MPD are estimates or incomplete, the incorrect programs could be selected and tested by the auditor. Those that provide oversight of Single Audits will see the Data Collection Form (DCF) and the SEFA in final form at the Federal Audit Clearinghouse (FAC). I recommend that the auditors always redo their MPD using the numbers in the final SEFA. Our firm has occasionally had to go back and audit another major program because the A/B threshold has changed, or a final adjustment has increased the program total to turn a B program into an A program.

For many organizations, the auditee asks the auditor to assist in drafting the SEFA and the financial statements. It is critical for the auditor to follow the independence standards of Generally Accepted Government Auditing Standards (GAGAS or Yellow Book). The auditor cannot assume management responsibilities.

There are numerous errors that have been noted in the SEFA. Many of these errors are based on new requirements for the SEFA that the Uniform Guidance put into place. The SEFA must have cluster names and cluster totals. We have identified many programs that we did not immediately recognize as clusters. If the SEFA had only one program or the program was very small, the cluster name and total was often missing. The cluster total is also very important on the DCF. At Maher Duessel, we have enhanced our review process to catch these clusters. Those providing oversight of the Single Audit program have found cases where the failure to identify a cluster led to a missed major program.

Other SEFA errors include:

  • Failure to include on the face of the SEFA the amount passed on to sub-recipients. (Under the A-133 requirements, this was permitted to be a footnote)
  • Failure to include in the footnote to the SEFA whether or not the non-federal entity elected to use the 10% de minimis cost rate
  • Failure to include the ending balance of a loan in the footnote (The Uniform Guidance has clarified that the beginning balance goes on the SEFA.)
  • Failure to place non-cash awards on the face of the SEFA. (Under the A-133 guidance, these could be included in the footnote presentation)

Certain errors in the SEFA can create an audit that is non-conforming. No one wants to re-issue an audit because of errors. It is important to learn the new rules included under the Uniform Guidance and to put procedures in place to prevent and detect errors.

Diane E. Edelstein, CPA, partner, Maher Duessel, has worked in non-profit and government auditing for over 25 years. At Maher Duessel, Diane serves as Single Audit specialist and is the designated audit partner responsible for quality controls required by the firm's participation in the AICPA Governmental Audit Quality Center.   

Learn More at the Yellow Book Workshop

March 10, 2017
Event Code: 13055, LS13055


Studies on Single Audit and Yellow Book Deficiencies

The AICPA Professional Ethics Division, Most Frequent Violations of Professional Standards Government and Not-for-Profit Investigation, reveals significant issues in single audits and Yellow Book engagements, including deficiencies in audit procedures performed, auditor’s reporting, and financial statement deficiencies.

Learn how to avoid common deficiencies found in single audits and Yellow Book engagements using simulated case studies and practice exercises with lessons for today’s issues. These case studies and practice exercises are based on the Yellow Book and the Uniform Guidance for Federal Awards. They will assist you in avoiding common mistakes and recognizing deficiencies before it’s too late.


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