The 501 S(c)ene

The latest view on not-for-profit accounting issues

Properly Identifying and Reporting Federal Funding

If your entity utilizes grant funding, it is important to identify if that funding is obtained from the federal government, whether by direct funding or a pass-through agency. Per Circular A-133 section 300, the grantee is responsible for identifying federal awards that must be reported on a supplementary statement to the financial statements: the Schedule of Expenditures of Federal Awards (SEFA). Depending on the amount of federal funding, your entity may be required to have a Single Audit in addition to your financial statement audit.

Here are a few ways to determine if grant amounts include federal funding that must be reported:

  1. The grant award has a seal in the heading of a federal department such as the Department of the Interior.
  2. A federal department is noted in the grant agreement as a contributor to the grant. Many times, a grant is partially federally funded and the percentage of federal funding is noted in the award.
  3. The grant award has a CFDA number listed. If anywhere in the grant award you note a five digit number formatted as follows, 18.677, the award is either fully or partially federally funded. It can be tricky to identify federal funds in a pass-through grant, so it’s important to fully read the agreement.
  4. The check or direct deposit is from a federal department or agency.
  5. The check or direct deposit document lists a CFDA number.

Identifying and reporting your federal funding correctly is vital to complying with your grant agreements. Also, if amounts are not properly reported as federal funding and aren’t included in your SEFA, your audit could result in a material weakness or significant deficiency.

By Samantha E. Mahlen, CPA