Single Audit Explained: When Federal Funding Triggers One

A single audit is a combined financial statement and federal compliance audit required when a non-federal entity spends $1,000,000 or more in federal awards during a single fiscal year. It is not the same as a standard financial statement audit: it goes further, testing whether the organization properly managed each major federal program and followed the terms and conditions attached to those funds. Nonprofits, state and local governments, universities, and tribal governments are all subject to the requirement once they cross that spending threshold.

What Is a Single Audit?

The single audit requirement comes from the Single Audit Act of 1984, as updated in 1996, and from the OMB Uniform Guidance codified at 2 CFR Part 200, Subpart F. In April 2024, OMB issued the most significant revision to the Uniform Guidance since its 2013 release, raising the audit threshold from $750,000 to $1,000,000, effective for fiscal years beginning on or after October 1, 2024.

The term “single” reflects the intent: one coordinated audit covers both the entity’s overall financial statements and all of its major federal programs, rather than separate audits conducted by each federal agency that awarded money to the entity. That consolidation reduces duplicative oversight while still giving federal agencies confidence that their funds were spent properly.

The audit must be conducted in accordance with Generally Accepted Government Auditing Standards (GAGAS), also known as the Yellow Book, published by the Government Accountability Office, as well as the compliance requirements in the OMB Compliance Supplement updated annually.

Who Must Have a Single Audit?

Any non-federal entity that expends $1,000,000 or more in federal awards during its fiscal year must have either a single audit or, in limited cases, a program-specific audit. The term “non-federal entity” captures a broad range of organizations:

• State governments and state agencies
• Local governments (counties, cities, townships)
• Nonprofits, including 501(c)(3) organizations
• Indian tribes and tribal organizations
• Institutions of higher education
• For-profit entities receiving certain types of federal financial assistance

The threshold is based on federal awards expended, not received or awarded. An organization counts all federal dollars it actually spent or obligated during the year, regardless of when the grant was originally awarded. Pass-through funding is included: if a state agency passes federal dollars through to a subrecipient nonprofit, that nonprofit must count those funds toward its own $1,000,000 threshold.

Entities Below the Threshold

Organizations that spend less than $1,000,000 in federal awards are exempt from the single audit requirement for that year, but they are not exempt from their grant agreement terms, from record-keeping requirements, or from the oversight of their pass-through entities. Many grantors still require a financial statement audit as a condition of funding even when expenditures fall below the single audit threshold.

If an organization expends federal awards under only one federal program (excluding research and development), and the program’s statutes, regulations, or award terms do not require a financial statement audit of the entity, it may elect a program-specific audit under 2 CFR 200.507 instead of a full single audit. This option is narrower in scope, and when a current program-specific audit guide exists for that program, the auditor follows it.

What a Single Audit Covers

The single audit has two primary components: an audit of the financial statements and an audit of federal program compliance.

Financial Statement Audit

The auditor issues an opinion on whether the entity’s financial statements are presented fairly in all material respects, in conformity with the applicable accounting framework (typically GAAP for nonprofits and governments). This portion is broadly similar to a conventional financial statement audit, with the addition of an in-relation-to opinion on the Schedule of Expenditures of Federal Awards.

Schedule of Expenditures of Federal Awards (SEFA)

The SEFA is a supplemental schedule prepared by management that lists every federal award expended during the year by federal agency, program name, Assistance Listing Number (ALN, formerly the Catalog of Federal Domestic Assistance or CFDA number), and dollar amount. The auditor renders an in-relation-to opinion on the SEFA as part of the financial statement audit report. The SEFA is the document that makes it possible to identify which programs exceed the major-program thresholds.

Federal Program Compliance Audit

This is the component unique to single audits. The auditor identifies major programs using a risk-based methodology under 2 CFR 200.518, classifying programs as Type A or Type B based on expenditure levels and assessing risk factors for each. For Type A programs, the threshold for entities with total federal awards of $34 million or less is $1,000,000 in expenditures. For larger entities, the Type A threshold scales upward.

For each major program, the auditor tests internal controls over compliance and tests direct compliance with the requirements most likely to have a material effect on the program. Those requirements include activities allowed or unallowed, allowable costs, cash management, eligibility, matching and level-of-effort, period of performance, procurement, reporting, and subrecipient monitoring, among others.

The Output: What a Single Audit Produces

A completed single audit results in a reporting package that includes:

1. The audited financial statements
2. The SEFA with the in-relation-to opinion
3. Reports on internal control over financial reporting and compliance (GAGAS-required)
4. Reports on internal control over compliance and on compliance for each major federal program
5. A schedule of findings and questioned costs
6. A corrective action plan prepared by management for any findings

The auditor’s findings in a single audit carry more formality than findings in a typical financial statement audit. Each finding is assigned a reference number, and the organization must respond with a written corrective action plan. Federal agencies and pass-through entities monitor unresolved findings and may impose conditions on future awards.

Submitting to the Federal Audit Clearinghouse

The complete reporting package, along with a Data Collection Form (SF-SAC), must be submitted to the Federal Audit Clearinghouse (FAC) operated by the General Services Administration. The submission deadline is the earlier of:

• 30 calendar days after receipt of the auditor’s reports, or
• 9 months after the end of the audit period

The FAC makes single audit submissions publicly available, which means any federal agency, pass-through entity, or member of the public can search for and download an organization’s single audit results.

What Triggers a Single Audit in Practice

The clearest trigger is straightforward: total federal expenditures in the fiscal year hit or exceed $1,000,000. Several funding sources count toward that figure and are worth tracking carefully.

Direct federal grants from agencies like HHS, HUD, USDA, or the Department of Education count in full.

Federal pass-through awards received from a state agency or another nonprofit also count. Organizations receiving pass-through funds should receive a subrecipient notification from their pass-through entity identifying the Assistance Listing Number (ALN), the federal award amount, and whether the funding is subject to the Uniform Guidance.

Federal contracts and cooperative agreements that involve cost reimbursement provisions count as federal expenditures under the Uniform Guidance. Fixed-price contracts are generally excluded, but cost-reimbursement contracts above the threshold are included.

COVID-era relief programs (PPP, CARES Act grants, PRF payments) and other one-time federal funding surges have pushed many organizations over the threshold for the first time. Organizations that crossed it due to pandemic-era awards should confirm whether their cumulative federal expenditures for recent years still require an audit.

For nonprofits receiving federal funding, tracking SEFA-eligible expenditures year-round, rather than scrambling to reconstruct them at fiscal year end, significantly reduces the time and cost of preparing for a single audit.

How Long Does a Single Audit Take?

Single audits typically take longer than standard financial statement audits because of the additional federal compliance testing. A typical timeline from audit commencement to issuance of the reporting package ranges from three to six months, depending on the size of the organization, the number of major programs, and the quality of the entity’s records.

Common causes of delays include:

• An incomplete or inaccurate SEFA
• Weak documentation of compliance with grant terms (eligibility determinations, matching contributions, time-and-effort records)
• Prior year findings that require follow-up testing
• Slow responses to auditor requests for supporting documentation

Organizations that prepare a draft SEFA before fieldwork begins, maintain a centralized grant file for each award, and close out sub-award monitoring documentation throughout the year consistently experience faster single audit turnarounds.

How Single Audits Differ From Financial Statement Audits

The table below highlights the key distinctions.

Feature	Financial Statement Audit	Single Audit
Governing standard	GAAS (AICPA)	GAAS + GAGAS + 2 CFR Part 200
Primary output	Opinion on financial statements	Opinion on financials + SEFA + federal compliance reports
Findings reported	Material misstatements	Findings, questioned costs, material weaknesses
Public disclosure	Optional	Required via FAC submission
Trigger	Contractual or statutory	Federal award expenditures >= $1,000,000

An organization subject to a single audit must have a financial statement audit as part of it; the compliance work layers on top of that baseline.

Preparing for a Single Audit

The most effective preparation starts before the fiscal year ends, not after. Key steps include:

• Maintain a live SEFA. Track federal expenditures by program throughout the year and reconcile them to the general ledger monthly.
• Document grant compliance continuously. Eligibility determinations, procurement records, matching documentation, and subrecipient monitoring should be filed and accessible by award number.
• Address prior-year findings. Implement corrective actions and document them. Auditors will test whether prior findings recurred.
• Know your major programs in advance. Using the Type A threshold applicable to your entity size, estimate which programs are likely to be major programs and focus documentation efforts there.
• Engage your auditor early. Establish a timeline, confirm the SEFA format, and discuss any new federal awards that may introduce compliance requirements the organization has not addressed before.

Related reading: Schedule of Expenditures of Federal Awards: How to Prepare the SEFA

Frequently Asked Questions

What is a single audit?

A single audit is an annual audit required by federal law for organizations that spend $1,000,000 or more in federal awards during a fiscal year. It covers both the entity’s financial statements and compliance with the requirements of each major federal program. The requirement is governed by 2 CFR Part 200 (the Uniform Guidance) and the Single Audit Act.

What is the single audit threshold for 2025?

For fiscal years beginning on or after October 1, 2024, the single audit threshold is $1,000,000 in federal award expenditures. This represents an increase from the previous $750,000 threshold. Organizations with fiscal years that began before October 1, 2024 should confirm which threshold applied to their specific audit period.

What are single audit requirements for nonprofits?

A nonprofit must have a single audit if it expends $1,000,000 or more in federal awards in a fiscal year. The audit must be conducted under GAGAS and 2 CFR Part 200 by an independent auditor. The resulting reporting package, including a schedule of findings, must be submitted to the Federal Audit Clearinghouse within 9 months of the fiscal year end (or 30 days after the auditor’s report is received, whichever comes first).

How is a single audit different from a regular audit?

A regular financial statement audit results in an opinion on the financial statements under GAAS. A single audit includes that opinion but adds a GAGAS audit of the financial statements, a SEFA with an in-relation-to opinion, and compliance and internal control reports for each major federal program. Findings are formally documented, responded to in a corrective action plan, and publicly disclosed through the Federal Audit Clearinghouse.

Which federal expenditures count toward the $1,000,000 threshold?

All federal awards expended during the fiscal year count, including direct federal grants, pass-through awards from state agencies or other nonprofits, federal cost-reimbursement contracts, and cooperative agreements. The test is based on amounts expended (spent or obligated) during the year, not amounts received. Fixed-price contracts and certain loan programs have specific rules that may affect whether they are counted.

What happens if a single audit finds problems?

The auditor documents problems as findings in a schedule of findings and questioned costs. The organization must prepare a written corrective action plan for each finding. Federal agencies and pass-through entities review findings and may require repayment of questioned costs, impose special conditions on future awards, or require additional monitoring. Repeat findings from prior years typically receive greater scrutiny.