A Single Audit is required when a non-federal entity spends $750,000 or more in federal awards during a single fiscal year under 2 CFR Part 200, Subpart F.
What happens when a Single Audit is required?
When a Single Audit is required, your organization must undergo a comprehensive examination of its financial statements and compliance with federal program requirements.
Here’s what that means in practice: two main areas get scrutinized—your financial statements and whether you followed the rules for major federal programs. The audit checks if funds were used properly, internal controls were strong, and federal laws weren’t broken. Run into problems? You could face disallowed costs, repayment demands, or even lose future federal funding. Take a nonprofit that got $800,000 in federal grants for housing programs—every dollar gets examined, and your internal controls better be up to snuff. The $750,000 threshold hasn’t budged since the Uniform Guidance updates in 2014, and it’s still the same as of 2026.
(Honestly, this is the kind of thing that keeps nonprofit finance teams up at night.) The audit doesn’t count funds like CARES Act or PPP loans toward the $750,000 threshold, but almost everything else does—USDA, HUD, DOE awards, you name it. Cross that threshold, even by a little, and the Single Audit requirement kicks in.
How do you prepare and execute a Single Audit?
To prepare and execute a Single Audit, you must gather all federal award documentation, compile the Schedule of Expenditures of Federal Awards (SEFA), and engage a qualified auditor.
First, double-check if you’ve hit the $750,000 mark by reviewing your general ledger and award agreements. Then, round up every piece of federal award paperwork—agreements, grant notifications, CFDA numbers, the works. Don’t forget the SEFA, which has to list every federal program, even the ones under $750,000, and match your financial statements exactly. Say your fiscal year ends June 30, 2026—you’ve got until March 31, 2027 to file that audit report.
Next, find an auditor who knows government auditing standards (the Yellow Book). Those standards get updated often by the GAO, so make sure your auditor’s up to date. Independence matters here—your auditor can’t have any conflicts of interest. When you submit, your package should include financial statements, the SEFA, the auditor’s report, and any findings or questioned costs. Miss that nine-month deadline? Penalties or lost funding could follow.
What if you miss the deadline or the audit gets rejected?
If you miss the deadline or the audit is rejected, you should request an extension, explore program-specific audits, or bring in a compliance professional.
First step? Contact the cognizant agency (the one that gave you the biggest award) and ask for an extension. Explain why you’re late and propose a new timeline. No guarantees, but agencies sometimes grant extensions for real issues like staffing shortages or wonky financial systems.
Got all your federal money from one program or agency? Check if a program-specific audit could work instead. It’s a narrower review, which might let you skip the full Single Audit. Say all your federal funds come from one HUD program—this smaller audit might be enough.
If the audit results are rough, bring in a compliance consultant who knows Uniform Guidance inside and out. They can help fix internal control gaps, sort out disallowed costs, and handle any corrective action plans the feds require. Move fast, and you can soften penalties and keep future funding safe.
How can you avoid needing a Single Audit down the road?
To avoid needing a Single Audit, maintain strong financial controls, track federal awards meticulously, and conduct regular internal reviews.
Start by setting up a grant management system to track award dates, CFDA numbers, and fund disbursements all in one place. Tools like QuickBooks Enterprise or Salesforce Nonprofit Cloud can automate a lot of this. Set up alerts for award deadlines, and you won’t accidentally slip up on compliance reporting.
Run quarterly internal reviews to catch discrepancies early. Automate checks for unallowable costs—like lobbying or entertainment—before they become big problems. Regular reconciliations keep your records sharp and audit-ready at all times.
Finally, train your team on Uniform Guidance and federal cost principles. Make sure staff know, for example, that salaries for employees juggling multiple federal grants must be split based on time spent. Build a culture where compliance isn’t an afterthought, and you’ll dodge audit headaches while keeping your funding eligibility intact.
