Each and every year, the Federal government pours billions of dollars into the pool for non-profit organizations and state and local governments. Attached to these dollars are strict stipulations that these organizations must follow. To ensure adherence, the Single Audit Act, as amended, requires each reporting entity that spends $500,000 or more in a year to obtain what is known as a “single audit.” In this type of audit, an opinion is not only expressed on the reporting entity’s financial statements, but also on the financial and compliance aspects of Federal awards.
The auditee has important roles and responsibilities in a single audit. One of these responsibilities is the preparation of a statement known as the Schedule of Expenditures of Federal Awards (SEFA). This schedule details, amongst other things, total Federal awards expended by the reporting entity during the year and is required under Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. If this schedule is prepared incorrectly or if the schedule is incomplete, there is the potential that a control deficiency exists which will need to be reported.
To ensure that that the SEFA is prepared correctly and that it represents the complete picture of Federal awards expended, the American Institute of Certified Public Accountants’ Governmental Audit and Quality Center has released illustrative practice aids. Click here to access these practice aids.
For more information on issues facing the not-for-profit industry, contact Skoda Minotti at 440-449-6800.