Difference Between Yellow Book and Single Audit: 2025 Guide

Introduction

With increasing scrutiny of public spending and federal awards, audits are no longer just financial check-ins—they're essential tools for risk management and regulatory compliance. Entities that receive government assistance must ensure that their internal controls, program oversight, and financial management align with federal expectations.

Among the most important frameworks governing these audits are:

• The Yellow Book, formally known as Generally Accepted Government Auditing Standards (GAGAS), and
• The Single Audit, governed by the Single Audit Act and Uniform Guidance (2 CFR Part 200, Subpart F).

What is the Yellow Book?

The Yellow Book, formally titled the Government Auditing Standards, is issued by the U.S. Government Accountability Office (GAO). It outlines the Generally Accepted Government Auditing Standards (GAGAS), which provide a comprehensive framework for conducting high-quality audits in the public sector. These standards are essential for promoting accountability and transparency in how public funds are managed and reported.

Whether the audit involves a federal agency, a state government program, or a nonprofit organization receiving federal grants, the Yellow Book ensures that audits are conducted with consistency, integrity, and professional competence.

Purpose:

The Yellow Book was developed to ensure that all government audits meet uniformly high standards. It promotes the following core principles:

• Auditor Competence: Auditors must possess the appropriate qualifications, skills, and continuing education to perform audits effectively.
• Integrity and Objectivity: Auditors are expected to act with honesty and fairness and to maintain a neutral, unbiased mindset.
• Independence: To prevent conflicts of interest, auditors must remain free from external influence both in fact and appearance.
• Consistent, High-Quality Audits: The standards ensure that audit work, documentation, and reporting meet a baseline of rigor and reliability across all sectors.

These principles help build public trust in the findings of audits conducted in accordance with GAGAS.

Applicability:

Yellow Book standards apply to a wide array of audits involving public resources. Entities required—or choosing voluntarily—to follow these standards may include:

• Government entities at the federal, state, and local levels
• Programs and activities that are funded by public money
• Nonprofit organizations, contractors, and subrecipients that receive government awards or grants

In many cases, funding agreements, legislation, or regulatory bodies require that an audit be performed under GAGAS. Even in instances where it’s not mandatory, organizations may choose to follow Yellow Book standards to enhance credibility and accountability.

Types of Audits Covered:

The Yellow Book sets standards for three main types of engagements:

1. Financial Audits: These focus on determining whether an entity’s financial statements are presented fairly in all material respects, in accordance with the applicable financial reporting framework.
2. Attestation Engagements: These include examinations, reviews, and agreed-upon procedures engagements that typically address subject matters such as internal controls, compliance with specific regulations, or performance measures.
3. Performance Audits: These evaluate the efficiency, effectiveness, economy, and equity of operations or programs. Performance audits go beyond financial metrics and assess whether entities are achieving intended outcomes with public resources.

Performance audits are particularly relevant for agencies and organizations that must demonstrate value for taxpayer dollars or show compliance with performance-based grant objectives.

Latest Update: 2024 Yellow Book Revision

To remain responsive to the evolving public sector landscape, the GAO periodically updates the Yellow Book. The 2024 revision reflects updates related to quality control, independence safeguards, and audit documentation requirements.

Key effective dates include:

• For financial audits, attestation engagements, and reviews: Effective for periods beginning on or after December 15, 2025
• For performance audits: Effective for periods beginning on or after December 15, 2025

What is a Single Audit?

By definition, a Single Audit is a comprehensive examination of an organization's financial statements and compliance with federal requirements, it ensures that organizations expending federal funds are accountable and meet the necessary regulations.

The Single Audit is a rigorous, organization-wide audit required for entities that expend significant federal funds. It's designed to streamline oversight while ensuring federal dollars are used properly and programs meet compliance requirements. An annual audit required for entities that spend $1,000,000 or more in federal assistance in a fiscal year, effective for fiscal years beginning on or after October 1, 2024.

Purpose

The primary purpose of the Single Audit is to provide federal agencies and oversight bodies with reasonable assurance that recipients of federal funds are managing those resources in a compliant, transparent, and accountable manner.

This audit ensures that:

• Funds are spent appropriately: Entities must demonstrate that federal awards are used for authorized purposes only, in alignment with grant agreements, approved budgets, and allowable cost principles.
• Entities comply with program-specific requirements: The audit tests whether the organization is following the Uniform Guidance rules applicable to each major program.
• Financial reporting is accurate and complete: The Single Audit helps verify that financial statements fairly represent the organization's financial position and operations, including how federal funds have been accounted for errors, misstatements, or misuses of funds must be identified and corrected.

Ultimately, the audit is designed to reduce the audit burden on both grant recipients and the federal government by consolidating multiple grant-specific audits into a single, comprehensive engagement.

Components

The Single Audit consists of two integrated parts, both of which must be completed by an independent auditor:

1. Audit of the financial statements: This portion follows generally accepted auditing standards (GAAS) and GAGAS (Yellow Book), evaluating whether the organization’s financial statements are free from material misstatement, it includes testing of internal controls over financial reporting.
2. Audit of compliance with federal program requirements: This segment focuses on whether the entity has complied with key federal regulations and grant-specific terms and conditions. The auditor selects "major programs" based on criteria such as funding size and risk and tests for compliance in areas such as:
    
   • Eligibility determinations
   • Allowable costs
   • Reporting accuracy
   • Procurement procedures
   • Subrecipient oversight

Auditors issue a Schedule of Findings and Questioned Costs, outlining any deficiencies or material noncompliance discovered during the audit.

Governing Regulations

The Single Audit is legally mandated and guided by two major frameworks:

• Single Audit Act of 1984 (amended in 1996): This federal law requires comprehensive audits for non-federal entities that expend significant federal assistance. It was enacted to promote accountability and reduce the duplication of effort across government agencies.
• Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200, Subpart F) — commonly referred to as the Uniform Guidance: Issued by the Office of Management and Budget (OMB), the Uniform Guidance consolidates and streamlines federal requirements across all grant-making agencies. Subpart F specifically covers audit requirements and defines:
   
  • Audit thresholds
  • Auditor responsibilities
  • Reporting deadlines
  • Criteria for identifying major programs

Together, these regulations form the compliance backbone of the Single Audit process and set the expectations for both auditees and auditors.

Key Differences Between Yellow Book and Single Audit

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Recent Updates and Considerations

As we move into 2025, organizations that receive federal funding must be aware of several significant updates that directly impact their audit obligations. These changes reflect a broader effort by oversight agencies to improve audit quality, streamline compliance, and reduce unnecessary burdens on smaller recipients.

Yellow Book 2024 Revision

The 2024 revision of the Government Auditing Standards (commonly known as the Yellow Book) introduces enhanced guidance to strengthen audit performance and credibility. Key elements of the revision include:

• Effective Date: The revised standards apply to:
   
  • Financial audits, attestation engagements, and reviews for periods beginning on or after December 15, 2025.
  • Performance audits for periods beginning on or after December 15, 2025.
• Key Emphases:
   
  • Auditor Independence: Strengthened guidance on avoiding threats to auditor independence, especially in engagements involving non-audit services.
  • Quality Control and Assurance: Expanded requirements for audit documentation and internal reviews to support high-quality outcomes.
  • Risk Assessment: Greater focus on risk-based approaches for planning and performing audits.

Organizations subject to Yellow Book audits should review the changes proactively and consult with their auditors to align practices accordingly.

Single Audit Threshold Change

One of the most impactful updates for recipients of federal assistance is the increase in the Single Audit threshold:

• New Threshold: The federal expenditure threshold has increased from $750,000 to $1,000,000
• Effective Date: This applies to fiscal years beginning on or after October 1, 2024

Implications:

• Reduced Burden for Smaller Entities: Many smaller nonprofits, municipalities, and tribal organizations will no longer be required to undergo a Single Audit, resulting in time and cost savings.
• Higher Expectations for Larger Recipients: Entities still subject to Single Audit will face increased scrutiny and are expected to demonstrate robust financial and compliance controls.

Organizations near the new threshold should assess their funding trajectories and determine whether a Single Audit will be required in future fiscal periods.

Compliance Planning: What to Do Now

In light of these changes, proactive planning is essential. Organizations should:

• Monitor Federal Expenditures: Carefully track federal grant spending across all programs to determine audit applicability and ensure timely reporting.
• Engage Auditors Early: Consult with auditors well before the fiscal year-end to understand which standards apply and to begin any necessary readiness assessments.
• Stay Informed: Regularly review updates and guidance from:
   
  • The U.S. Government Accountability Office (GAO) – for Yellow Book revisions.
  • The Office of Management and Budget (OMB) – for changes to the Uniform Guidance and Single Audit requirements.

FAQs

What is the Yellow Book for audits?

The Yellow Book refers to the Generally Accepted Government Auditing Standards (GAGAS) issued by the GAO, which provide the framework for conducting audits with objectivity, competence, and integrity, especially in government and nonprofit sectors.

What is the difference between a Single Audit and a regular audit?

A Single Audit includes both a financial and compliance audit for entities that spend significant federal funds. A regular audit, including those under the Yellow Book, may focus solely on financials without addressing specific federal program compliance.

What is the Single Audit threshold for $1,000,000?

Effective October 1, 2024, entities that spend $1,000,000 or more in federal awards during the fiscal year are required to undergo a Single Audit under Uniform Guidance.

Conclusion

Understanding the difference between Yellow Book and Single Audits is critical for organizations that receive federal funding. As compliance thresholds and audit standards evolve in 2025, financial officers, auditors, and nonprofit leaders must stay proactive and informed. Whether subject to a Yellow Book audit, a Single Audit, or both, preparing in advance can ensure audit readiness, federal compliance, and continued funding.