Category: Audits

If your organization receives a lot of federal funding, here’s something important to know: starting with fiscal years that begin on or after October 1, 2024, any group spending $1 million or more in federal awards will need to undergo a Single Audit (or, in some cases, a program-specific audit).

Think of the Single Audit as a financial “check-up.” It’s designed to make sure federal funds are being used properly and in line with program rules. This applies to a wide range of entities, including states, local governments, nonprofits, universities, and tribes. Federal financial assistance comes in many forms—grants, but also cooperative agreements, loans, commodities, insurance, and more—so it’s worth double-checking how your funding is classified.

Not every organization falls under the requirement (for example, some for-profits and international groups may be exempt), but award agreements will spell out exactly what’s expected. And even if you’re under the $1 million threshold, you still need to maintain good records and be prepared for possible reviews.

Single Audit Requirements FAQs 

What Is a Single Audit?

A single audit is a rigorous review that combines a financial statement audit with an assessment of compliance with federal program requirements. It is required for any non-federal entity that expends $1 million or more in federal awards during a fiscal year for fiscal years starting Oct. 1, 2024. 

The primary purpose of the single audit is to verify that federal funds are managed properly, spent in accordance with laws and regulations, and that the intended program objectives are met. This process ensures accountability and transparency, helping federal agencies confirm that recipients fulfill their obligations and uphold the integrity of federal programs.

Why Are Single Audits Important?

Single audits are essential for promoting accountability and transparency in the use of federal funds. Failure to complete a required audit can lead to serious consequences, including loss of current or future funding, repayment of improperly used funds, increased audit scrutiny and reputational harm with funders and stakeholders.

Thresholds and Triggers 

The expenditure threshold applies to an organization that expends at least $1 million in total federal funding within a fiscal year, not to each grant individually. This threshold is based on an entity’s fiscal year: 

• For January–December fiscal years, the rule applies Jan. 1, 2025, onward
• For July–June fiscal years, July 1, 2025, onward
• For October–September fiscal years, Oct. 1, 2024, onward. 

Entities should carefully review their fiscal year to determine whether their next audit is subject to the previous $750,000 threshold or the new $1 million requirement.

Who Performs a Single Audit?

A single audit must be conducted by an independent certified public accountant (CPA) with experience in federal grant auditing. The auditor is responsible for reviewing the organization’s financial statements, Schedule of Expenditures of Federal Awards (SEFA), internal controls and compliance with federal requirements. They identify major federal programs, issue findings and submit audit reports. 

Meanwhile, the entity being audited must maintain complete and accurate records, prepare the SEFA, provide access and documentation to the auditor, respond to any findings, and ensure all required reports are submitted promptly to the Federal Audit Clearinghouse (FAC).

Single Audit Requirements to Know

Single audits must meet rigorous federal standards to ensure proper stewardship of federal funds. Key requirements include:

• Governing Regulations: Audits are conducted under the authority of the Single Audit Act and the Office of Management and Budget’s (OMB) Uniform Guidance. Auditors must also adhere to the annually updated OMB Compliance Supplement, which provides detailed rules for auditors testing specific federal programs for compliance.
• Scope of the Audit: The audit must cover the entity’s entire financial operations. This includes both a standard financial statement audit and a detailed compliance audit of federal program requirements to ensure funds were spent appropriately.
•  Major Program Determination: The auditor identifies “major programs” for in-depth testing. This selection is based on total expenditure levels and a risk assessment that considers program complexity, past audit findings and any federal oversight concerns.
• Schedule of Expenditures of Federal Awards (SEFA): Your organization is responsible for preparing a SEFA, a comprehensive list of all federal awards expended during the fiscal year. This schedule must include Assistance Listing Numbers (ALNs), program names, award amounts and pass-through entity details.
• Reporting Requirements: The final audit package is a comprehensive collection of documents. It must include the auditor’s opinion on the financial statements, a report on compliance and internal controls, the SEFA, a schedule of findings and questioned costs, and a corrective action plan for any identified issues.
• Submission Requirements: The complete audit package and a Data Collection Form (DCF) must be submitted to the Federal Audit Clearinghouse (FAC) by the specified deadline. Copies must also be provided to any pass-through entities that awarded subrecipient funding.

Common Single Audit Findings

Understanding the most frequent audit findings can help organizations proactively address potential issues before they become compliance problems. These recurring deficiencies often stem from inadequate preparation, poor internal controls or misunderstanding of federal requirements.

• Inaccurate or Incomplete SEFA: The SEFA frequently contains errors such as missing federal awards, incorrect Assistance Listing numbers or unreported subawards to other organizations.
• Late FAC Submission: Missing the Federal Audit Clearinghouse deadline typically results from delayed auditor work, poor project scheduling or inadequate coordination between the entity and its auditor.
• Weak Internal Controls: Common control deficiencies include insufficient segregation of duties, undocumented financial processes and inadequate review procedures for federal expenditures.
• Failure to Meet Program Objectives: Auditors often find spending that’s misaligned with stated program goals or evidence of missed performance milestones and deliverables.
• Cybersecurity Deficiencies: Organizations frequently struggle with weak access controls, unencrypted sensitive data and inadequate information security policies.

Addressing these areas proactively can significantly reduce audit findings and demonstrate strong stewardship of federal funds.

Best Practices for Preparing for a Single Audit 

Effective preparation for a single audit involves year-round organization, clear roles and diligent documentation. Focusing on a few core best practices will help ensure smoother audits and fewer findings.

Establish Strong Internal Controls

Strong internal controls are the backbone of audit readiness. Start by creating clear, written policies and procedures that cover tracking, reporting, and compliance. Designate a single audit coordinator who can serve as the central point of contact and keep everyone aligned. To reduce risk, separate key duties among staff so no single person controls an entire process. Finally, build in regular internal compliance checks to identify and resolve potential issues before they become problems.

Understand All Compliance Requirements

A successful audit starts with knowing the rules that apply to you. Stay informed of relevant regulations by reviewing grant agreements and the most recent OMB Compliance Supplement, which explains compliance requirements in detail. Determine your oversight or cognizant federal agency, since they may have specific requirements. 

Maintain Accurate Financial and Program Records

Strong recordkeeping and effective tech is essential for passing an audit. Use separate accounts or fund codes for each grant, and document every expenditure and approval. Reconcile accounts regularly to catch discrepancies early and confirm that costs are allowable, allocable, and reasonable. For staff working on multiple programs, maintain clear time and effort reports so labor costs are properly supported.

Prepare the SEFA Early

Begin work on your SEFA well ahead of deadlines. List all direct and pass-through awards, including correct Assistance Listing numbers, award amounts, clusters and subrecipient details. Reconcile the SEFA with your general ledger and double-check for common errors like missing awards or incorrect numbers to avoid findings.

Use Thompson Grants’ Compliance Alerts

Written by leading experts in auditing, Thompson Grants’ Single Audit Information Service Module is the most extensive and easy-to-use guide of its kind that delivers detailed analyses of every aspect of single audit requirements and procedures, ranging from determining major programs, procuring an auditor, reviewing auditee reports, conducting site visits, and preparing auditor findings.

Wrapping Up

Preparing for a single audit doesn’t have to be overwhelming when you have the right strategies in place. By establishing strong internal controls, understanding compliance requirements, maintaining accurate financial records, preparing your SEFA early and leveraging Thompson Grants’ specialized compliance information, your organization can navigate the audit process with confidence. 

Start by reviewing your current processes to identify areas for improvement, then implement systematic changes that strengthen your compliance framework year-round. Take advantage of available resources, expert guidance and compliance tools to ensure your organization is audit-ready. With proper preparation and the right support, you can transform single audit compliance from a challenge into a demonstration of your organization’s commitment to responsible stewardship of federal funds.

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About the Author

Jerry Ashworth

Jerry Ashworth is the editor at Thompson Grants. Mr. Ashworth has served as the editor of these publications for more than 22 years. He has more than 35 years of journalism experience, including the last 30 years in the newsletter industry covering a range of topics from federal grants and single audits to electronic commerce and environmental issues. Mr. Ashworth has a Bachelor of Arts in Journalism degree from the University of Georgia and is a member of the Society of Professional Journalists. He can be connected with via LinkedIn.