What Triggers an A-133 Audit? A Guide to Single Audit Requirements & Compliance

Introduction

A Single Audit, formerly known as an A-133 audit, is a federally mandated examination of an entity’s financial statements and federal award expenditures. This audit applies to non-federal entities that receive and expend a significant amount of federal funding. Compliance with these requirements is crucial for maintaining eligibility for future federal grants and contracts.

What Is an A-133 Audit?

The A-133 audit was originally governed by the Office of Management and Budget (OMB) Circular A-133. However, as of December 26, 2014, it has been incorporated into the Uniform Administrative Requirements (2 CFR Part 200, Subpart F), also known as the Uniform Guidance.

A Single Audit is designed to provide assurance that federal funds are used appropriately and that an entity’s financial statements fairly present their financial position. This audit applies to various organizations, including nonprofits, local governments, higher education institutions, and tribal organizations.

What Triggers a Single Audit (A-133 Audit)?

A Single Audit is required when a non-federal entity expends $750,000 or more in federal awards within a fiscal year. This includes:

Direct federal funding – Funds received directly from a federal agency.
Pass-through funding from state or local governments – Federal funds distributed to entities through state or local agencies, which are responsible for oversight and compliance requirements.
Federal grants, cooperative agreements, and loans – Various financial assistance mechanisms used to support eligible programs and projects.

Entities that meet this threshold must ensure compliance with federal audit requirements. This means maintaining proper documentation of expenditures, implementing internal controls to safeguard federal funds, and being prepared for an auditor’s review of financial and program-related activities. Additionally, organizations should assess their grant agreements for any special conditions or reporting requirements imposed by the funding agency.

What Is the Threshold for an A-133 Single Audit?

The current threshold for requiring a Single Audit is $750,000 in federal expenditures per fiscal year. Entities below this threshold are not required to undergo a Single Audit but must still maintain proper financial records and internal controls to demonstrate compliance with federal funding guidelines.

Even if an entity is not subject to a Single Audit, federal agencies or pass-through entities may still request financial documentation to ensure funds are used appropriately. Maintaining detailed records, adhering to federal cost principles, and implementing sound internal controls are essential practices for all federally funded entities, regardless of audit requirements. Additionally, organizations close to the threshold should carefully monitor their expenditures to avoid unexpected compliance obligations.

What Are Government Auditing Standards and Circular A-133 Audits?

Single Audits must adhere to:

Generally Accepted Government Auditing Standards (GAGAS), commonly known as the Yellow Book, which establishes guidelines for financial integrity and accountability in audits of government programs and federal awards.
Uniform Guidance (which replaced Circular A-133), which standardizes federal grant management and audit requirements across agencies.

A Single Audit consists of both financial and compliance components, ensuring that federal funds are properly accounted for and that the recipient organization adheres to applicable laws, regulations, and grant conditions. Auditors review internal controls, financial statements, and grant compliance to assess risk and identify potential issues such as material weaknesses or improper expenditures.

Is OMB Circular A-133 Still in Effect?

No. OMB Circular A-133 was superseded by the Uniform Guidance (2 CFR Part 200) on December 26, 2014. However, many still refer to these audits as “A-133 audits” due to historical usage.

The Uniform Guidance consolidated multiple federal grant-related circulars into a single set of regulations, simplifying compliance for grant recipients. It introduced more robust risk assessment and oversight measures, placing increased responsibility on grant recipients to demonstrate financial accountability and compliance with grant conditions.

What Happens During a Single Audit?

A Single Audit includes:

Review of internal controls over compliance – ensuring that adequate financial management systems and safeguards are in place to properly handle federal funds.
Testing of major federal programs – selecting and reviewing high-risk programs based on expenditure levels, program complexity, and prior audit findings.
Examination of financial statements and Schedule of Expenditures of Federal Awards (SEFA) – verifying that financial reporting is accurate and aligns with federal requirements.
Reporting of findings – identifying material weaknesses, questioned costs, or areas of noncompliance, which may require corrective actions to maintain future eligibility for federal funding.

The audit process involves coordination between auditors, finance teams, and program administrators to ensure that financial transactions and grant activities align with federal compliance requirements.

Why Is It Important to Stay in Compliance?

Failure to comply with Single Audit requirements can lead to:

Suspension or loss of future federal funding – Noncompliance can jeopardize an entity’s ability to receive future grants or cooperative agreements.
Repayment of misused funds – If funds are found to be used improperly, organizations may be required to return them to the federal government.
Increased audit scrutiny or additional oversight – Entities with compliance issues may be subject to heightened review, additional reporting obligations, or more frequent audits by federal agencies or oversight bodies.

Maintaining compliance demonstrates fiscal responsibility and strengthens an organization’s credibility for future federal funding opportunities. Organizations should establish strong internal controls, conduct regular compliance reviews, and engage knowledgeable auditors to ensure adherence to federal grant regulations.

Conclusion

Entities that expend $750,000 or more in federal funds within a fiscal year must undergo a Single Audit. While the term “A-133 audit” is outdated, the audit remains a crucial tool in ensuring federal grant compliance. Organizations should carefully track their federal expenditures and consult experienced auditors to navigate Uniform Guidance audit requirements effectively.