Single Audit Requirements for Federal Grants: A Complete Guide

Understanding the Single Audit Requirement

The single audit, sometimes called the A-133 audit after its predecessor regulation, is the federal government's primary mechanism for ensuring that organizations receiving federal funds comply with applicable laws, regulations, and award terms. Codified in 2 CFR 200 Subpart F, the single audit applies to any non-federal entity that expends $750,000 or more in federal awards during its fiscal year. This threshold applies to total federal expenditures across all awards, not to any individual grant.

The single audit serves two purposes. First, it provides an independent examination of the organization's financial statements. Second, it tests compliance with the specific requirements that apply to each major federal program. The result is a comprehensive audit report that is submitted to the Federal Audit Clearinghouse and made available to all federal agencies that have awards with the audited organization. For context on the broader compliance framework, see our post-award grant management compliance guide.

Who Must Have a Single Audit?

The single audit requirement applies to states, local governments, tribal governments, nonprofit organizations, and institutions of higher education that meet the expenditure threshold. Several important distinctions apply:

• The threshold is based on expenditures, not awards received. If you receive a $1 million grant in Year 1 but only expend $500,000, you would not trigger the single audit in Year 1 unless your total federal expenditures from all sources exceed $750,000.
• For-profit entities are generally not subject to the single audit unless specifically required by their award terms. They may instead be subject to program-specific audits.
• Pass-through funds count. If your organization receives federal funds as a subrecipient, those expenditures count toward the $750,000 threshold.

Organizations that expend less than $750,000 in federal awards are exempt from the single audit but are not exempt from maintaining adequate records. Federal agencies retain the right to conduct site visits, review financial records, and require additional reporting from any recipient regardless of the audit threshold.

Key Components of a Single Audit

A single audit consists of several interrelated components that together provide a comprehensive picture of the organization's financial management and federal compliance.

Financial Statement Audit

The auditor examines the organization's financial statements in accordance with Generally Accepted Auditing Standards. This component produces an opinion on whether the financial statements present fairly, in all material respects, the financial position of the organization. This is essentially the same audit that many organizations already undergo annually, but it forms the foundation of the single audit.

Compliance Testing of Major Programs

The auditor identifies major federal programs using a risk-based approach and tests the organization's compliance with requirements that could have a direct and material effect on each major program. The Compliance Supplement, published annually by the OMB, identifies the specific compliance requirements for each federal program. Common compliance areas tested include:

• Activities allowed or unallowed
• Allowability of costs and cost principles
• Cash management and payment procedures
• Eligibility determinations for program participants
• Period of performance requirements
• Procurement, suspension, and debarment
• Reporting requirements
• Subrecipient monitoring

Schedule of Expenditures of Federal Awards

The organization must prepare a Schedule of Expenditures of Federal Awards (SEFA), which lists all federal awards and the amounts expended during the audit period. The SEFA is a critical document that identifies which programs are subject to audit and provides the basis for determining major programs. Preparing the SEFA accurately requires careful tracking of federal expenditures by program, which is why strong financial management systems are essential. Understanding your grant budget fundamentals and cost principles is foundational to getting this right.

Audit Timelines and Submission

Single audits must be completed and the reporting package submitted to the Federal Audit Clearinghouse within 30 days after receipt of the auditor's report or nine months after the end of the audit period, whichever comes earlier. For an organization with a June 30 fiscal year-end, the deadline would be March 31 of the following year.

Meeting this deadline requires advance planning. Organizations should begin preparing for their single audit several months before fiscal year-end by reconciling accounts, compiling documentation, and reviewing compliance with major program requirements.

Managing Audit Findings

When auditors identify instances of non-compliance or internal control weaknesses, they report these as audit findings. Findings are categorized by severity and type, and they trigger specific follow-up requirements:

• Material weaknesses represent the most serious deficiencies in internal control and typically require immediate corrective action.
• Significant deficiencies are less severe than material weaknesses but still warrant attention.
• Questioned costs arise when the auditor identifies expenditures that may not be allowable, allocable, or reasonable under the applicable cost principles.

For each finding, the organization must prepare a corrective action plan that describes the specific steps it will take to address the deficiency. Federal agencies review these plans and may impose additional conditions on future awards if findings are not adequately resolved.

Preparing for a Successful Single Audit

Organizations that consistently receive clean audit opinions share several common practices. They maintain detailed documentation throughout the year rather than scrambling to compile records at audit time. They conduct internal monitoring reviews to catch and correct problems early. They communicate regularly with their auditors to resolve questions before they become findings. And they invest in training staff on federal compliance requirements.

Developing strong budgeting and cost allocation practices is one of the most effective ways to prevent audit findings. Our guide on advanced grant budgeting strategies covers techniques for managing complex multi-year federal awards with confidence.

Learn more about grant writing strategies at Subthesis.

Strengthen Your Audit Readiness

Preparing for a single audit does not have to be overwhelming. With the right knowledge and systems in place, your organization can approach audit season with confidence. Enroll in The Complete Grant Architect course to build the compliance expertise you need to manage federal grants successfully and pass your single audit with ease.