How to Maintain SEFA Records Between Audits

Why SEFA Errors Happen

The Schedule of Expenditures of Federal Awards is required under 2 CFR 200.510(b) for any organization expending $1,000,000 or more in federal awards in a fiscal year. The requirement is clear. The failure mode is predictable.

Organizations that prepare the SEFA once a year, at audit time, from memory and prior-year records, produce schedules that are consistently inaccurate. Awards are missing. Expenditure totals are pulled from the award amounts rather than actual spending. Assistance Listing numbers are wrong or missing. Pass-through entity information for sub-awards is incomplete.

Auditors find these errors. They require correction before the SEFA can be accepted. The correction process - tracing each award back to the source, pulling actual expenditures from the general ledger, verifying Assistance Listing numbers - takes the time that year-round maintenance would have avoided, compressed into the two weeks before fieldwork when everyone is already at maximum stress.

The Running SEFA Approach

The SEFA is not a report you generate at year-end. It is a schedule you maintain throughout the year, updated as awards are received and expenditures are incurred.

Setting up the running SEFA structure at the start of the fiscal year takes about two hours. You create one row per active federal award (or sub-award) with the required fields pre-populated from the notice of award and the grant agreement: federal grantor agency, pass-through entity name and identifying number (for sub-awards), program name, Assistance Listing number, total award amount (not the SEFA figure - this is just a reference), and cluster designation if applicable.

From that point, the monthly update takes 30 minutes: pull the current grant-specific expenditure totals from the general ledger for each award, enter them in the tracking record, and confirm the running SEFA total matches the grant fund balance report. If anything does not reconcile, investigate during the monthly close - not three months later when the context is gone.

Cluster Program Identification

Cluster identification is where SEFA errors become single audit scope problems rather than just schedule inaccuracies.

A cluster aggregates related federal programs for major program determination. An organization that misidentifies a cluster program as a standalone program will have the wrong expenditure total in the major program selection calculation. If a cluster should have been selected as a major program but was not because of incorrect identification, the audit scope is deficient - and auditors are required to note scope limitations.

Check the OMB Compliance Supplement - Part 5, “Clusters of Programs” - when each new award is received. If the Assistance Listing number appears in a cluster listing, note the cluster designation in the SEFA row.

Common clusters that appear in nonprofit grant portfolios: Child Nutrition Cluster (CFDA 10.553, 10.555, 10.556, 10.559), Community Development Block Grants/Entitlement Grants Cluster, Research and Development Cluster, and Workforce Innovation and Opportunity Act (WIOA) Clusters.

Pass-Through Award Information

When your organization receives federal funds as a sub-award from a pass-through entity rather than directly from a federal agency, the SEFA must reflect this structure.

Required fields for pass-through awards:

The name of the pass-through entity. This is the organization that issued the sub-award to you - a state agency, a larger nonprofit that received the federal prime award, or another pass-through.

The pass-through entity’s identifying number for the award. This is the unique identifier the pass-through entity assigned to the sub-award - it appears on the sub-award agreement. It is not the federal award’s FAIN. It is the pass-through’s internal award number.

The Assistance Listing number should be the same as the underlying federal program - not the pass-through entity’s internal program code. If the pass-through did not provide the Assistance Listing number on the sub-award agreement, request it. You cannot prepare a compliant SEFA without it.

Year-End Reconciliation Before Fieldwork

One to two weeks before auditors begin fieldwork, produce the draft SEFA and run the final reconciliation: every SEFA row against the general ledger expenditure total for that award.

The reconciliation should be document-level: pull the grant-specific expenditure report from the accounting system and compare it against the SEFA row total. Any variance requires an explanation before submitting the SEFA to auditors.

Also verify: all awards that were active at any point during the fiscal year appear on the SEFA, even if expenditures were minimal. An award with $8,000 in expenditures still belongs on the SEFA.

Download the SEFA Prep Worksheet for the year-round tracking structure and pre-fieldwork reconciliation checklist.

Free resource

Get the SEFA Prep Worksheet

A structured worksheet for preparing the Schedule of Expenditures of Federal Awards (SEFA) - award-by-award data collection, common error checks, and a pre-audit reconciliation checklist. Delivered by email.

Schedule of Expenditures of Federal Awards (SEFA): A supplementary financial statement schedule listing all federal awards expended by a non-federal entity during a fiscal year. Required for organizations subject to a single audit under 2 CFR 200.510(b).

Major program: A federal program selected by the auditor for testing based on risk and expenditure thresholds. Programs are selected using the risk-based approach in 2 CFR 200.518. Major program selection is based on SEFA expenditure data.

Assistance Listing number: Previously called the CFDA number, the Assistance Listing number is a five-digit identifier (format: XX.XXX) that identifies each federal program in SAM.gov. Required on the SEFA and on all sub-award agreements.

Pass-through entity identifying number: The identifier assigned by the pass-through entity to a sub-award. Must be included on the SEFA for awards received as sub-awards, along with the pass-through entity's name.

Q&A

How do SEFA errors affect the single audit?

SEFA errors - incorrect expenditure totals, missing awards, wrong Assistance Listing numbers - can cause the auditor to restate the schedule, which delays audit completion. More significantly, errors can affect major program determination: if an award is underreported, a program that should have been selected as major may not be, creating a scope deficiency. Consistently inaccurate SEFAs are themselves an audit finding.

Q&A

When should the SEFA be provided to the auditor?

Typically, the SEFA is provided as part of the trial balance package at the start of fieldwork. In practice, most auditors request a draft SEFA before fieldwork begins so they can make major program selections. Having a reconciled draft ready at least two weeks before scheduled fieldwork reduces audit timeline pressure.

Frequently asked

Frequently Asked Questions

What is the SEFA and who must prepare it?

The Schedule of Expenditures of Federal Awards (SEFA) is a supplementary financial schedule required under 2 CFR 200.510(b) for any non-federal entity that expends $1,000,000 or more in federal awards in a fiscal year and is therefore subject to a single audit. The SEFA lists every federal award expended during the fiscal year, organized by federal agency and program, and forms the basis for the auditor's major program determination.

How is federal expenditure determined for the SEFA?

Federal expenditures are determined on a cash or accrual basis, consistent with the grantee's accounting method. For most nonprofits using accrual accounting, expenditures are when the goods are received or services are rendered - not when cash is paid. For grants on a reimbursement basis, expenditures equal the costs incurred during the year. Advance draws that have not been expended are not SEFA expenditures.

What is a cluster for SEFA purposes?

A cluster is a group of closely related federal programs that share common compliance requirements and are treated as a single program for major program determination in the single audit. Clusters are defined in Part 5 of the OMB Compliance Supplement. All programs within a cluster are aggregated for the $1,000,000 major program threshold (raised from $750,000 for fiscal years ending September 30, 2025 or later) calculation.

What is the note disclosure requirement for the SEFA?

2 CFR 200.510(b) requires the SEFA to include a note that describes the significant accounting policies used to prepare it, discloses whether the 10% de minimis indirect cost rate was used, and discloses any federal programs for which the non-federal entity has elected to use a different indirect cost rate.