Article
Understanding the single audit, common pitfalls, and how to avoid them
Jan. 14, 2024 · Authored by Claire Hilleary
A Single Audit is a critical process for organizations that receive federal awards. By undergoing a Single Audit, organizations can strengthen their financial management practices, enhance transparency, and maintain the trust of funding agencies and stakeholders.
This article will cover the following:
- What is a Single Audit?
- Types of findings
- What will your Single Audit look like?
- Common pitfalls in grant compliance
- How to prepare for a Single Audit
What is a single audit?
A Single Audit, also known as a Uniform Guidance audit, is a comprehensive examination of an organization's financial statements and compliance with federal award requirements. Single Audits are conducted to ensure organizations expending federal awards meet the necessary regulations and are accountable for the funds they receive.
A Single Audit includes an audit of both your organization’s financial statements and compliance with federal award requirements for those programs identified as major programs — based on application of the risk-based approach and criteria outlined in Title two Code of Federal Regulations (CFR) Section 200.518 and .519 — for the audit.
Through the audit process, the auditors determine whether your organization’s financial statements fairly present the financial position of the organization and whether they’re presented in accordance with Generally Accepted Accounting Principles (GAAP) or another comprehensive basis of accounting.
Both the financial statement audit and the compliance audit provide information on the internal controls design appropriateness and operating effectiveness, which enables management to identify systematic weaknesses in a timely manner.
What governs how it’s completed?
The standard-setting body that governs Single Audits in the United States is the Office of Management and Budget (OMB). The OMB issues the Compliance Supplement that auditors use to conduct Single Audits. Single Audits are required for non-federal entities (NFEs) that expend more than $750,000 of federal dollars within their fiscal year. An NFE means a state, local government, Indian Tribe, Institution of Higher Education (IHE), or not-for-profit organization that carries out a federal award as a recipient or subrecipient. Recently, OMB proposed revisions to the Uniform Guidance, most notably to raise the Single Audit threshold from $750,000 in federal awards expended within a fiscal year to $1 million, the first increase in the Single Audit threshold since 2013.
