When Does Your Nonprofit Need a Single Audit?
A single audit could be required if your nonprofit has $1 million or more in federal award expenditures in a single fiscal year beginning on or after October 1, 2024.
This amount was raised from a $750K threshold under the 2024 Uniform Guidance update.
State and local grants are not included in this amount unless they pass through federal funds.
If you receive multiple federal grants, make sure to include the expenditures for all of them in your total.
Example:
Federal Grant #1 for $400K (fiscal year 2024)
PLUS
Federal Grant #2 for $700K (fiscal year 2024)
$1,100,000 Total (single audit required)
If you spend funds from BOTH of these grants in the same fiscal year, you should include BOTH in your calculation.
That brings your total expenditures to $1.1 million and triggers a single audit requirement, even though the individual grants are each less than $1 million.
Prior to fiscal year 2024, the single audit threshold was $750K. Many older grant agreements, state laws, and online articles still reference this outdated figure. We can help you determine which threshold applies to your fiscal year.
Schedule a free single audit consultation
What’s Tested in a Single Audit?
Single audits include much of the same information as a regular audit, but also incorporate an audit of the statement of federal awards: why you received the awards, how you used the funds, and whether you followed the relevant grant policies for each federal award.
A Single Audit Includes:
- A financial statement audit completed according to Yellow Book audit standards
- Schedule of Expenditures of Federal Awards (SEFA) testing
Financial Statement Audit
Financial statement audits are standard audits of your nonprofit's financial statements under GAAS (Generally Accepted Auditing Standards) as defined by the PCAOB.
Internal Controls Testing
Internal controls testing is one of our favorite parts of the single audit. It gives us a clear picture of what you do and how you do it. We test your internal policies to see whether they actually work, or if they’re just words on paper.
This can include reviewing your policies and procedures for business continuity planning, fraud prevention, management approvals, allocation of responsibilities, etc.
We test these controls to determine whether your procedures are being followed (and documented) as described, and how efficient they are at preventing or detecting misstatements in a timely manner.
These tests often reveal material weaknesses or deficiencies (employees not following procedures, or not documenting their actions to prove they’re following procedures, gaps in reporting, etc.)
Material Weaknesses: Examples of material weaknesses include:
- Accounting Errors
- Incomplete Records
- Inaccurate Reconciliations
Deficiencies: We identify deficiencies when it appears that the design or operation of one of your internal control processes doesn’t allow you to prevent or detect misstatements in a timely manner.
Findings: Inadequate or ineffective internal controls are a common finding. Other examples of findings include:
- Lack of Documentation
- Inadequate Inventory Controls
- Non-Compliance with Regulatory Standards
- Inaccurate Financial Statements
If your internal controls appear effective, your control risk could be considered low. But it they are not effective, our auditors may need to perform additional testing or request more information to have a high level of confidence in your financial statement.
Compliance Testing
Compliance testing verifies that you are adhering to the specific compliance requirements of a federal regulatory body.
What Is a SEFA in a Single Audit?
SEFA is an acronym for Schedule of Expenditures of Federal Awards. This supplemental financial report is a crucial requirement for non-federal entities, including nonprofit organizations reliant on federal grant funds and subject to threshold requirements.
If your federal award expenditures equal $750,000 or more for fiscal years prior to October 1, 2024 or $1 million or more for fiscal years beginning on or after October 1, 2024, you may be required to complete a SEFA since you’ve met or surpassed the single audit threshold.
The SEFA lists your federal funding sources and expenditures, including both direct and pass-through awards, usually through a dedicated department, fund or cost center. Many federal agencies rely on SEFA data for consideration of future federal awards.
Not sure if you need a SEFA? Contact us for a FREE consultation
Single Audit vs. Yellow Book Audit vs. Regular Audit
Single audits are required for non-federal entities with federal fund expenditures of $750,000 or more for fiscal years prior to October 1, 2024 or $1 million or more for fiscal years beginning on or after October 1, 2024.
The difference between a Yellow Book audit and a single audit is the last statement: the statement of federal awards.
The Hidden Compliance Trap Most Nonprofits Don't Know
You cannot pay federal funds to suspended or debarred vendors.
The SAM (System of Awards Management) exclusion list is filled with entities and individuals who are prohibited from receiving federal awards, grants, or contracts, often due to fraud, criminal activity, or failure to adhere to federal regulatory/compliance standards.
That $50K payment you made to a vendor on the suspended/debarred list will be revealed on a single audit.
Once it becomes an audit finding, you’ll be forced to explain it, and that can make it much more difficult to qualify for future awards.
Vendor Vetting
To avoid this, check and recheck every new vendor and your existing vendors at SAM.gov. Incorporate this step into your procedures and document it every time you vet a new or existing vendor before you pay them.
Building this check into your AP process before the audit starts is the single more important step you can take to avoid findings. We can help you implement this as part of your audit preparation.
Major Program Determination: How Auditors Decide What to Test
On a single audit, major programs are federal programs subject to a higher degree of compliance testing. We use a risk-based approach to determine if you require this level of scrutiny based on the following factors:
- Your threshold of federal expenditures
- Your program’s unique risk assessment
- Coverage rules that require us to sample a minimum percentage of total federal expenditures
Single Audit Due Dates and Timeline
The amount of time required for your single audit is largely dependent on the state of your books and your ability to respond quickly to our requests for information.
Due Dates and Typical Timelines:
- Standard single audits average 6–8 weeks for completion, but can be as quick as 4 weeks if you’re very responsive and have clean books
- The federal deadline for submission to the Federal Audit Clearinghouse (FAC) is nine (9) months following the end of the fiscal year (or 30 days from the date of receipt of the auditor's report, whichever is earlier)
How to Prepare for Your Single Audit
Preparing for your single audit is a process of gathering your records and documenting your processes and policies.
You’ll need to do the following:
- Reconcile all federal grant accounts to your general ledger.
- Build your SEFA — include a list of every federal award by CFDA/Assistance Listing number, federal agency, pass-through entity (if any), and total expenditures.
- Document your internal control policies for federal program management
- Run all current and prior-period vendors through SAM.gov and document this vetting process.
- Pull the OMB Compliance Supplement for each major program and map your compliance to it.
- Gather all subrecipient agreements and monitoring documentation.
What Single Audit Findings Mean (and How to Avoid Them)
Single audit findings are definitely something you want to avoid, since they can have a negative impact on future federal grant funding. Federal agencies may consider any findings reported on your single audit as an indication of risk they aren’t willing to assume.
Three Types of Findings:
- Material weakness in your internal controls (ex. processes that aren’t sufficient to prevent/detect fraud)
- Significant deficiencies
- Questioned costs (such as a payment to a debarred or suspended vendor)
Why Work With Clarity Tax Group on Your Single Audit?
Single audits determine the future of your federal funding. We work with you before the audit begins to prevent findings that could negatively impact your organization.
We also adhere to the highest standards for quality and customer satisfaction, including:
- Registration with the PCAOB (Public Company Accounting Oversight Board)
- We are peer-reviewed every 18 months (most recent opinion available on request)
- Our senior auditors run our engagements. Your single audit will not be handed off to a junior auditor.
- We provide year-round, same-day responsiveness with no off-season closures.
- We help you create solid vendor-vetting and SEFA processes BEFORE fieldwork starts so your audit can have fewer findings.
- We communicate in plain English and explain what we’re testing and why.
We'll help you determine whether you've crossed the required reporting threshold, what your timeline looks like, and what you need to correct before fieldwork begins.
Frequently Asked Questions about Single Audits, Due Dates and SEFA
What is the single audit threshold for 2025?
The single audit threshold for fiscal year 2025 is $1 million in federal award expenditures. This does not include state or local grants, unless they pass through federal funds.
If you receive multiple federal grants, you should include the expenditures for ALL grants when calculating your total to determine whether you meet the threshold for a single audit.
What's the difference between a single audit and a regular audit?
The difference between a single audit and a regular audited financial statement is this: non-federal entities (like nonprofits) that receive federal grant funds may be required to complete a single audit if they spend $1 million or more for fiscal years beginning on or after October 1, 2024.
Single audits contain a SEFA (Schedule of Expenditures of Federal Awards,) a supplemental financial report required for non-federal entities, including nonprofit organizations that receive federal grant funding.
The SEFA lists your federal funding sources and expenditures, including both direct and pass-through awards, often through a dedicated cost center, fund or department. Federal agencies may review the information you provide in the SEFA when you apply for future federal grants.
What's the difference between a Yellow Book audit and a single audit?
The difference between a Yellow Book audit and a single audit is the final statement — the statement of federal awards that we include in Yellow Book audits. We also use different accounting standards for each.
Following are the differences between the various accounting standards used for regular audits, Yellow Book audits and single audits.
When is the single audit due date?
The federal deadline for submission to the Federal Audit Clearinghouse (FAC) is the earlier of the two (2) following dates:
- Nine (9) months after the end of the fiscal year OR
- 30 days from the date of receipt of the auditor's report