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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 7 – Federal Deferred Revenue

Unearned revenues related to federal programs include:

  • Prepaid federal grants that were not earned by fiscal year-end.
  • Governmental funds only – Federal revenue that was earned but not available at fiscal year-end. (On the modified accrual basis, revenue is available if it can be collected within approximately 60 days.)

Disclose the following balances of deferred revenues related to federal grants by ALNs:

  • Beginning balance at Sept. 1, 20PY
  • Net change during the fiscal year
  • Ending balance at Aug. 31, 20CY

Agencies are required to provide a detailed explanation for all unearned revenue recorded in SEFA’s Note 7.

Agencies providing the reason of earned but not available should note that this type of unearned revenue is only recognized in the governmental fund types and must be converted to federal revenue in the government-wide financial statements.

Note: Universities are exempt from SEFA’s Note 7.

According to GASB 65, 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
  • deferred costs are now prepaid costs

The term deferred may still be used in SEFA to align with the Office of Management and Budget (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (commonly referred to as the “Uniform Guidance”; formerly OMB Circular A-133).