Single Audit Requirements Explained

If your nonprofit receives federal funding, you may be subject to Single Audit requirements. This comprehensive audit goes beyond standard financial statements to examine your compliance with federal grant requirements.

Here's what you need to know.

What is a Single Audit?

A Single Audit (also called an A-133 audit, after the old regulation) is a rigorous, organization-wide audit required for entities spending $1,000,000 or more in federal awards during their fiscal year.

It examines:

1. Financial statements — Like a regular audit
2. Federal award compliance — Did you follow grant rules?
3. Internal controls — Are your processes adequate?

The audit is governed by 2 CFR 200, Subpart F (the Uniform Guidance).

The $1,000,000 Threshold

You need a Single Audit if:

• You're a non-federal entity (nonprofit, state, local government, tribe)
• You expend $1,000,000 or more in federal awards during your fiscal year

Key points:

• "Expend" means spend, not receive
• The threshold is per fiscal year
• It includes direct federal awards AND pass-through (subgrants)
• State and local government funds don't count toward the threshold

Example Scenarios

Scenario	Federal Expenditures	Single Audit Required?
$500K federal + $300K state	$500,000	No
$400K federal direct + $400K federal pass-through	$800,000	Yes
$600K federal in Year 1, $800K in Year 2	$800,000 (Year 2)	Yes (Year 2 only)

Pass-Through Funding Counts

Money that flows through a state agency or another nonprofit still counts as federal if it originated from the federal government.

How to know if it's federal:

• Check the grant agreement for a CFDA number
• Look for federal terms and conditions
• Ask the pass-through entity

If there's a CFDA (Catalog of Federal Domestic Assistance) number, it's federal.

What Gets Tested

The Single Audit has several components:

1. Financial Statement Audit

Standard audit of your organization's financial statements under GAAP.

2. Schedule of Expenditures of Federal Awards (SEFA)

A required schedule listing all federal programs, expenditures, and pass-through information.

3. Compliance Testing

For "major programs" (selected based on risk and dollar amount), auditors test compliance with:

Compliance Requirement	What's Tested
Allowable Costs	Are expenses eligible for the grant?
Cash Management	Are you minimizing time between drawdown and disbursement?
Eligibility	Do participants/beneficiaries qualify?
Period of Performance	Are costs within the grant period?
Procurement	Did you follow required purchasing procedures?
Reporting	Are reports accurate and timely?
Subrecipient Monitoring	Are you overseeing your subgrantees?

4. Internal Control Testing

Auditors evaluate whether your controls are designed to prevent non-compliance.

Major Program Determination

Not every federal program gets compliance testing—only "major programs." The auditor determines major programs based on:

1. Risk assessment — Prior audit findings, new programs, complexity
2. Dollar threshold — Generally, programs over $750K or 3% of total federal expenditures

Type A programs (larger) are more likely to be tested than Type B (smaller).

The Audit Report Package

A Single Audit produces these deliverables:

1. Financial statements and auditor's opinion
2. Schedule of Expenditures of Federal Awards (SEFA)
3. Auditor's reports on:
   • Internal control over financial reporting
   • Compliance with federal requirements
   • Internal control over compliance
4. Schedule of Findings and Questioned Costs
5. Summary Schedule of Prior Audit Findings
6. Corrective Action Plan (if findings exist)

Filing Requirements

Single Audit reports must be submitted to the Federal Audit Clearinghouse within:

• 30 days after receipt of the auditor's report, or
• 9 months after fiscal year-end

Whichever is earlier. Late submission can affect future funding.

Website: harvester.census.gov/facweb

Common Audit Findings

Finding 1: Unallowable Costs

Charging expenses that aren't eligible under the grant. Examples:

• Entertainment expenses
• Alcohol
• Costs outside the grant period
• Costs not in the approved budget

Finding 2: Inadequate Documentation

Missing or insufficient support for:

• Personnel costs (timesheets)
• Travel expenses (receipts, purpose)
• Procurement (bids, contracts)

Finding 3: Cash Management Issues

Drawing federal funds too early. You should only draw funds when you need to make immediate payments.

Finding 4: Subrecipient Monitoring Failures

Not adequately overseeing subgrantees:

• Missing risk assessments
• No monitoring visits or reviews
• Not verifying subrecipient audits

Finding 5: Late or Inaccurate Reporting

Federal reports (FFR, progress reports) submitted late or with errors.

Finding 6: Procurement Violations

Not following required purchasing procedures:

• No competitive bidding when required
• Missing conflict of interest documentation
• No price analysis

How to Prepare

Year-Round Preparation

Documentation:

• Keep contemporaneous records
• Document purpose for every expense
• Maintain signed timesheets for all personnel
• Keep procurement documentation complete

Policies:

• Written accounting policies aligned with Uniform Guidance
• Procurement policy with federal thresholds
• Travel policy with federal per diem compliance

Monitoring:

• Monthly grant budget reviews
• Quarterly compliance self-checks
• Subrecipient oversight activities

Pre-Audit Preparation (60-90 Days Before)

• Compile list of all federal awards
• Prepare draft SEFA
• Gather grant agreements and modifications
• Compile subrecipient monitoring documentation
• Reconcile grant expenditures to GL
• Prepare PBC (Prepared by Client) list items
• Review prior year findings and corrective actions

During the Audit

• Designate a primary audit contact
• Respond promptly to auditor requests
• Be transparent about challenges
• Document explanations in writing

Cost of Single Audits

Single Audits are more expensive than standard financial statement audits due to the additional compliance testing.

Audit Type	Typical Cost Range
Financial statements only	$15,000 - $35,000
Single Audit (1-2 major programs)	$25,000 - $50,000
Single Audit (3+ major programs)	$40,000 - $75,000+

Costs vary by organization size, complexity, and auditor.

Note: Single Audit costs are allowable grant expenses and can be allocated across federal awards.

When You Cross the Threshold

If you're approaching $750,000 in federal spending:

1. Improve documentation now — Don't wait until you're over the threshold
2. Strengthen internal controls — Easier to fix before the audit
3. Budget for audit costs — Plan for the higher expense
4. Choose an experienced auditor — Single Audits require specialized expertise

Avoiding the Threshold

Some organizations try to stay under $750,000 by:

• Timing expenditures across fiscal years
• Declining certain grants

Caution: Deliberately avoiding the threshold while accepting federal funds may violate grant terms. And the compliance requirements apply regardless of audit threshold—you can still face penalties for non-compliance.

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