Determining expenditures for Single Audit reporting can be complicated since there are many types of transactions which are considered federal grant expenditures when addressing the Single Audit determination. Non-cash federal aid (e.g. equipment from Homeland Security) must be included in determining the $500,000 Single Audit threshold.

According to Office of Management and Budget (OMB) Circular A-133: “Generally, the activity pertains to events that require the non-Federal entity to comply with laws, regulations, and the provisions of contracts or grant agreements, such as: expenditure/expense transactions associated with grants, cost-reimbursement contracts, cooperative agreements, and direct appropriations; the disbursement of funds passed through to subrecipients; the use of loan proceeds under loan and loan guarantee programs; the receipt of property; the receipt of surplus property; the receipt or use of program income; the distribution or consumption of food commodities; the disbursement of amounts entitling the non-Federal entity to an interest subsidy; and, the period when insurance is in force.”

For example, if you receive a USDA loan/grant, the costs associated with the loan/grant may be required to be reported in the year of the expenditure, even if the loan/grant funds are actually received in a subsequent year. Another example is non-cash assistance. Non-cash assistance such as free rent, food stamps, food commodities, donated property or surplus property may all qualify as expenditures in determining federal funds expended.

A common expenditure in recent years has been equipment purchased by the State or other entity and “awarded” to local entities. Often the purchase is made through a central purchasing agency, such as Fisher Scientific. The State pays for the purchase and the item is shipped to the local agency. Several local agencies may even work cooperatively using one contact such as a County Coordinator requesting all the equipment for their use as well as each city within the County. According to Department of Homeland Security, such equipment should be shown as an expenditure on the County’s Schedule of Expenditures of Federal Awards (SEFA) as passed through to the cities. It would also be included in the city’s SEFA.

The Director of the Department of Homeland Security (DHS) addressed such expenditures regarding property (equipment) awarded under sub-grant awards to local governments under DHS State grants, e.g. 97.004 State Domestic Preparedness Equipment Support Program (aka State Homeland Security Program State), 97.008 Urban Area Security Initiative, and 97.067 Homeland Security Grant Program. In reference to the applicability of OMB Circular A-133 Audit requirements and property grant/sub-grants awards, the DHS has determined the following:

If a sub-grantee receives a property sub-grant award (e.g. equipment purchased by the State under the DHS programs) and other assistance (funding or property) from other federal agencies, the property is considered federal grant expenditures. If this in conjunction with other federal expenditures exceeds the $500,000 level in a single year, you are subject to the Single Audit requirements.

For further information, contact Lewis, Hooper & Dick, LLC at (620)275-9267.

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