Auditee Responsibilities Under OMB Circular A-133 - SEFA
May 16, 2014
Nonprofit organizations receiving federal funding have specific responsibilities required under OMB A-133 (see chart for summary). One of the most important responsibilities required is the preparation of the Schedule of Expenditures of Federal Awards (SEFA).
The OMB states that nonprofit organizations are responsible for preparing the SEFA. From the OMB’s viewpoint, since the auditee is in the best position to identify federal awards and related terms, the burden should be on the auditee. The AICPA has developed two Practice Aids to assist the auditee in preparing the SEFA.
The first practice aid, Worksheet for Identifying Federal Program Information, is designed to assist the auditee in compiling information about the federal programs. It also helps the auditee identify which compliance requirements (listed in the OMB A-133 Compliance Supplement) are applicable to each program. The second practice aid, Auditee Disclosure Checklist for the SEFA, is designed to assist the auditee in preparing the SEFA itself by identifying important content considerations, such as CFDA numbers, clusters of programs and pass through entities.
As the auditee embraces this responsibility, auditors will have a sufficient basis in performing their responsibilities required by OMB A-133. The auditor is required to provide an opinion on whether the SEFA is fairly presented in all material respects, in relation to the auditee’s financial statements. Also, the SEFA serves as the primary basis for the auditor’s major program determination.
Once a nonprofit organization gains a full understanding of their responsibilities, it will be on the path towards an efficient and successful audit.
|Task||Auditee Responsibilities||Auditor's Responsibilities|
|Financial statements||Prepare financial statements and footnotes which are accurate and complete and reflect the Organization’s financial position, statement of activities, changes in net assets and cash flows for the year then ended.||Provide opinion on whether or not the financial statements are presented fairly in conformity with auditing standards generally accepted in the United States of America and the standards applicable to financial statements contained in Government Auditing Standards (GAGAS).|
|Schedule of Federal Awards (SEFA)||Prepare the schedule of expenditures of federal awards for the year and related footnote disclosures.||Provide an opinion on whether the SEFA is presented fairly in all material respects in relation to the auditee’s financial statements taken as a whole.|
|Internal Control||Establish and maintain internal controls over federal awards that provide reasonable assurance that the auditee is managing federal awards in compliance with laws, regulations and the provisions of the contracts or grant agreement that could have a material effect on each of its federal programs.||Perform procedures to obtain an understanding of internal control over federal programs sufficient to plan the audit to support a low assessed level of control risk for major programs. Provide a report on internal control related to the financial statements and major programs.|
|Compliance||Comply with laws, regulations and the provisions of contracts or grant agreements related to each of its federal programs.||Perform procedures to determine if auditee complied with laws, regulations and the provisions of contracts and grant agreements. Provide a report on compliance with laws, regulations and the provisions of contracts or grant agreements, noncompliance with which could have a material effect on the financial statements.|
|Audit Findings||Auditee is responsible for follow-up and taking corrective action on all audit findings. Auditee shall prepare a summary schedule of prior audit findings and the corrective action plan.||Provide a report on audit findings in a schedule of findings and questioned costs, including 1) findings related to the financial statements which are required to be reported in accordance with GAGAS and 2) findings and questioned costs for federal awards which include audit findings as follows: reportable conditions in internal control over major programs; material noncompliance with provisions of laws, regulations, contracts or grant agreements related to a major program; and known questioned costs and known instances of fraud affecting a federal award.|
|Writing Representation||Provide written acknowledgement of responsibility for the content of the Schedule of Expenditures of Federal Awards in accordance with requirements of OMB A-133.||Review written representations of content of the Schedule of Expenditures of Federal Awards in accordance with the requirements of OMB A-133.|
|Report Submission||Electronically certify and submit the reporting package (including financial statements, schedule federal awards, summary schedule of prior audit findings, auditor’s reports, data collection form and corrective action plan, if applicable) within the earlier of 30 days after receipt of the auditor’s reports or nine months after the end of the audit period.||Electronically certify reporting package (including the data collection form).|
See our blog series on OMB Circular A-133: Common Audit Trouble Spots for additional information regarding OMB Circular A-133.