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The Governmental Audit Quality Center (GAQC) of the American Institute of Certified Public Accountants (AICPA) has revised its GAQC Nonauthoritative Guidance on the Reporting of Certain COVID-19 Awards on an Accrual Basis SEFA to account for federal rule changes concerning COVID-19 relief aid.

The document specifically addresses when funds should be included on the Schedule of Expenditures of Federal Awards (SEFA) for single audits under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, but the logic would be applicable to accrual basis SEFAs for funds received under the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) and the American Rescue Plan Act (ARPA) as well.

The update is in response to confusion caused by the timing of award notifications, availability and receipt of funds, numerous fiscal year ends relative to award dates, and amended use rules in a subsequent fiscal year—such as expanded uses and program end dates for CARES Act Higher Education Emergency Relief Fund (HEERF) program expansion under CRRSAA.   

Information and illustrations contained in the practice aid assume that the SEFA is presented on the accrual basis of accounting (when expenditures or lost revenue occurs).

Consistent with NACUBO’s understanding, the practice aid defines costs applied to awards as the time when the recipient makes an internal decision to apply costs incurred to an award and defines lost revenue as a concept permitted for purposes of SEFA reporting; therefore, internal decisions also will be applicable to lost revenue. However, because federal awards, such as HEERF program funds, can span as many as four fiscal years (depending on fiscal year end dates and use of allowable extensions) and award notifications may be received before funds are available to draw, an organization’s documented internal decisions on identified expenditures, estimated lost revenue, and fiscal year of intended award application will play a critical role in SEFA reporting on an accrual basis.

The GAQC document clarifies that:

  • There must be an award for expenditures to be reported on the SEFA in a particular period.
  • The determination of expenditures (allowable expenses or lost revenue) reporting on the SEFA is independent of revenue recognition under GAAP.
  • Generally, the timing of cash receipts (whether advances or reimbursements) should have no impact on SEFA recognition.
  • Although HEERF student aid must be disbursed for allowable institutional uses to be recognized under GAAP, there is no requirement to make student distributions before institutional costs are applied to the award. Therefore, the application of allowable institutional expenditures can be reflected on the accrual basis SEFA.
  • When an award exists as of the fiscal year end, expenditures (allowable costs incurred or lost revenue, as applicable) should be reported on the SEFA in the year incurred, even if a recipient makes such a determination after its fiscal year end.
  • If the performance period associated with an award allows a recipient to apply a future year’s expenditures (expenses or lost revenue) to the award, then a recipient can associate future expenditures, and those would be reported on a future year’s SEFA.
  • When an existing award is subsequently impacted by a substantial amendment to award terms due to new legislation, the amendment is the equivalent of a new award for purposes of determining when associated activity is presented on the SEFA.

Concerning the above clarifications, when allowable uses of HEERF I funds were expanded as a result of the CRRSAA HEERF II program, new lost revenue rules were not applicable to FY20 SEFAs because a new award occurred after most FY20 fiscal year ends. Regarding the existence of an award, judgment is required. As of this writing, NACUBO believes that the release of HEERF III allocation tables before May 31, 2021, that allow prior HEERF certification would indicate that qualifying institutions with a May 31 fiscal year end have an award—even if the Department of Education provides Grant Award Notifications in June. See NACUBO’s accounting tutorials for additional information on HEERF, lost revenue, expenditures, and SEFA reporting for more information.


Sue Menditto

Senior Director, Accounting Policy


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