What Triggers a Single Audit?

A Single Audit is triggered when an entity expends $750,000 or more in federal awards within a single fiscal year. This requirement applies to nonprofit organizations, state and local governments, and educational institutions that receive federal funding.

The audit ensures that federal funds are used properly and in compliance with Uniform Guidance (2 CFR Part 200, Subpart F) and Generally Accepted Government Auditing Standards (GAGAS).

Understanding the $750,000 Expenditure Threshold

The $750,000 threshold applies to total federal expenditures, not just grants received. This includes:

• Direct federal funding (e.g., grants, cooperative agreements).
• Pass-through funding (federal funds received via state or local governments).
• Loans and loan guarantees tied to federal assistance programs.

If an entity spends less than $750,000 in federal awards during a fiscal year, it is not required to undergo a Single Audit, though federal agencies may still request a financial review.

Purpose of a Single Audit

The Single Audit is designed to:

• Ensure compliance with federal regulations and grant agreements.
• Assess internal controls to prevent fraud and financial mismanagement.
• Review financial statements to confirm accurate reporting of federal expenditures.

Reporting and Compliance Requirements

If a Single Audit is triggered, the entity must:

1. Engage an independent auditor familiar with GAGAS and federal grant compliance.
2. Prepare a Schedule of Expenditures of Federal Awards (SEFA) to document all federal spending.
3. Submit the audit report to the Federal Audit Clearinghouse (FAC) within nine months after the fiscal year-end or 30 days after receiving the final audit report.

Conclusion

A Single Audit is triggered when an entity spends $750,000 or more in federal funds in a fiscal year. Organizations that meet this threshold must comply with GAGAS and Uniform Guidance to ensure proper financial management and regulatory compliance.