Does your organization need a single audit? Many organizations that receive federal funds do, but it’s not always the case. Use the guidance below to decide if your organization needs a single audit and to help prepare for it if you do.
1) First, determine if your organization receives funds either directly from a federal agency or from a passthrough entity as a subrecipient. If you’re receiving funds as a subrecipient, communicate with the passthrough entity to find out where your funds originate—whether it’s from a federal or state agency or another not-for-profit. If you’re wondering how to figure this out, take a look at the relevant grant contracts.
2) Next, quantify the amount of total expenditures that were made during the year using federal funds (when the expense/expenditure occurs) and then figure out if any of your grants/contracts exceed the $750,000 threshold to require a compliance audit.
Why do you need to know this? If your total federal awards expended for any grant program or cluster of grant programs are $750,000 or more, you must follow the audit requirements contained in the Single Audit Act and the Uniform Grant Guidance. This means that you may need to obtain a single audit.
What do we mean by federal awards? As defined in section 200.40 of the UGG, types of federal financial assistance (federal awards) include:
- Loan guarantees
- Non-cash contributions or donations of property, including donated surplus property
- Cooperative agreements
- Interest subsidies
- Food commodities
- Direct appropriations
- Other financial assistance
It doesn’t include amounts received as reimbursements for services rendered to individuals such as Medicare and Medicaid payments.
3) After that, obtain the current year OMB Compliance Supplement report from www.whitehouse.gov. Using the Catalog of Federal Domestic Assistance (CFDA) number for your specific federal programs/awards, identify the related compliance requirements that the federal government expects to be considered as part of an audit.
If the CFDA number isn’t included in the OMB Compliance Supplement, use your professional judgment to decide which compliance requirements are direct and material to the federal program/awards. Typically, this is completed through a thorough analysis of the federal funding agreement or contract.
4) Assess your organization’s audit readiness by isolating control activities over each compliance requirement identified and prepare the Schedule of Federal Expenditures (SEFA). Under UGG, the SEFA should list federal expenditures for each individual federal program by federal agency and CFDA number.
5) Last, contact us so that we can partner with you on your single audit. Learn more about our government agency and not-for-profit expertise.