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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Pass-Through Activity

Notes to SEFA
Note 2: Reconciliation

Prepare a formal reconciliation of the total federal revenues and federal pass-through revenues to the total pass-through to and expenditures in SEFA. Total federal revenues and federal pass-through revenues on the operating statement (Exhibit II and/or Exhibit IV) plus/minus the reconciling items must tie to the total pass-through to and expenditures in SEFA.

  • Report federal revenue and federal interagency pass-through revenue in Note 2 and tie the total to the operating statement.
  • Indirect cost recoveries and administrative costs recoveries are not listed separately but are included in the federal revenue or federal interagency pass-through revenue.
  • Regardless of whether the federal funds are passed-through to another agency or a non-state entity, report the revenue as either federal revenue or federal pass-through revenue. The revenue is not reported as a reconciling item.

The SEFA web application allows the entry of the legitimate reconciling items below. Not all of these items will be applicable to every agency.

  • Nonmonetary items (such as commodities and surplus property) are auto-populated from SEFA data
  • New loans processed are auto-populated from SEFA Note 3a
  • Federal revenue received where a vendor relationship exists between the agency and the federal government
  • Federal revenue received on the fixed fee basis contract
  • Federal revenue received from or sent to Texas A&M Research Foundation (Agency 014)
  • Federal revenue received under the Medicare Part D prescription drug subsidy program

If the previous classifications do not match all the reconciling items, make sure all revenues and expenditures are reported correctly as noted in examples below.

  • Funds collected but not expended are reported as deferred revenues; funds received but not passed through are reported as payables or “Due to Subrecipients.” These are not reconciling items. Disclose deferred revenue by CFDA number in SEFA Note 7. Universities are exempt from Note 7.
  • Subrecipients must include expenditures of pass-through funds as expenditures in SEFA.
  • Classifications of federal funds as previous year adjustments and/or changes in fund balance indicate errors were made in recording federal funds. Correct these items before preparing SEFA to ensure federal revenues and expenditures are reported in the appropriate fiscal year. Restatements are recorded in USAS, but not in SEFA. Accrual of revenue must occur in the year of the expenditure. If the expenditure did not occur in the following fiscal year, then reverse the revenue accrual and record a restatement in USAS. Do not adjust the current year’s revenue.
  • Earned federal funds are not a reconciling item.
  • For proprietary fund types that received federal surplus personal property, include a reconciling item for the amount of the difference between the estimated fair value recorded on Exhibit IV and the original federal acquisition cost of the property received.

Per GASB 65, the use of the term “deferred” is only used when referring to “deferred inflows of resources” or “deferred outflows of resources.” As a result, “deferred revenue” is now “unearned revenue” and “deferred costs” is now “prepaid costs.” The term “deferred” was not changed in the SEFA to be in compliance with Uniform Guidance (formerly Office of Management and Budget [OMB] Circular A-133).