The Objectives of Single Audits
A Single Audit combines a financial statement audit with a compliance examination for organizations that receive federal funding. It’s designed to ensure that organizations expending federal awards meet regulatory requirements and maintain accountability for the funds they receive.
This type of audit examines both the organization’s financial statements and their compliance with federal award requirements for major programs (see Title 2 Code of Federal Regulations (CFR) Section 200.518 and Section 200.519).
A Single Audit determines if the recipient (auditee) has:
- Established an accounting system with proper internal controls for all financial resources.
- Created financial statements that accurately reflect the organization’s financial position and comply with Generally Accepted Accounting Principles (GAAP).
- Submitted timely and accurate financial reports that align with award terms.
- Used federal funds legally and followed all applicable regulations.
Single Audit vs. Standard Independent Audit
Unlike a standard independent audit, a Single Audit goes much deeper by examining:
- Financial statement accuracy: Verifying that financial reports precisely match federal cost principles, tracking every dollar against strict governmental accounting standards.
- Internal controls: Thoroughly checking the organization’s financial management systems to identify potential weaknesses or vulnerabilities.
- Regulatory compliance: Ensuring the organization follows specific rules tied to each federal funding stream, with a detailed examination of grant-related regulations.
Who Sets the Requirements of a Single Audit?
The Office of Management and Budget (OMB) sets the standard for Single Audits. The Single Audit threshold — for fiscal years ending on/after October 1, 2024, the amount is $1 million — determines which non-federal entities (NFEs) must undergo these audits. Any NFE that spends more than this amount in federal funds annually must complete a Single Audit.
NFEs encompass:
- State and local governments
- Indian tribes
- Higher education institutions
- Non-profit organizations
Before October 1, 2024, the threshold for Single Audits was $750K.
Expended Federal Awards
Our team at SSL Associates has put together the table below to clarify when federal funds are considered expended for different types of assistance, informing Single Audit applicability.
| Federal Funding Type | When Funds are Considered “Expended” |
|---|---|
| Grants, Contracts, Cooperative Agreements, Direct Appropriations | When the organization spends money or incurs an expense. |
| Insurance | While the insurance coverage is active. |
| Donated or Surplus Property | When the organization receives the property. |
| Loans & Loan Guarantees | When the organization uses the loan funds. |
| Interest Subsidies | When the organization receives payments that qualify for a subsidy. |
| Food Commodities | When the food is distributed or used. |
For example, if the entity spends less than $1M in federal grants, they simply need to inform the SCO in writing that they are exempt from a full audit.
If the entity spends between $1M and $1M + any state grants, they can either submit their full audit report or a letter explaining why they don’t need one. The SCO will then issue a “No Review Letter” to the entity.
If the entity spends $1M or more in federal grants, including any state grants, they are required to submit a complete audit report to the SCO for review. Keep in mind that these reports are reviewed in the order they are received.
What Is the Timeframe for Conducting a Single Audit?
Single Audits are carried out after an organization’s fiscal year ends. The audit findings and reports must then be submitted to the Federal Audit Clearinghouse (FAC). This submission occurs within 30 days of receiving the auditor’s report or within nine months of the organization’s fiscal year-end, whichever comes first.
