$750,000. That is the number that changes everything about your annual audit. Once your organization expends $750,000 or more in federal awards during a fiscal year, you are no longer subject to a standard financial statement audit alone. You are subject to a Single Audit — a more rigorous, more expensive, and far more documentation-intensive process governed by 2 CFR 200, commonly called Uniform Guidance.
Many Controllers discover this threshold for the first time when they are already past it. This article explains what a Single Audit requires, how to determine if you are subject to one, and what your organization needs to have in place to get through it without findings.
What Is a Single Audit?
A Single Audit — historically called an A-133 audit, after the superseded OMB Circular A-133 — is an organization-wide audit that combines a financial statement audit with a compliance audit of federal programs. It is required under 2 CFR 200, issued by the Office of Management and Budget.
The Single Audit exists because federal agencies need assurance that grantees are spending federal funds according to program requirements. A standard financial statement audit tests whether your overall financial statements are fairly presented. A Single Audit goes further: it tests whether your federal programs are managed in compliance with applicable laws, regulations, and grant terms.
That distinction matters. You can receive a clean financial statement opinion and still receive findings in your Single Audit if federal program compliance is weak.
Who Is Required to Have a Single Audit?
Any nonprofit that expends $750,000 or more in federal awards during its fiscal year must have a Single Audit. The threshold is based on expenditures, not receipts. When you spend the money is what counts, not when you receive it.
The $750,000 threshold was increased from $500,000 when Uniform Guidance replaced OMB Circular A-133 in 2014. If your organization has been growing its federal grant portfolio, the threshold is worth monitoring even if you are currently below it.
What counts as federal expenditures?
Federal awards include direct grants from federal agencies and pass-through awards from state agencies, local governments, and other entities that distribute federal funds. If your county human services department funds you with federal Community Development Block Grant dollars, that spending counts toward your threshold, even though your check came from the county.
Tracking this correctly requires knowing the source of every award. Pass-through entities are required to identify the federal program and CFDA (Catalog of Federal Domestic Assistance) number on every subaward. If you cannot identify the ultimate federal source of a funding stream, ask the funder.
Major Program Determination
Not every federal program receives the same level of audit scrutiny. The Single Audit focuses testing on major programs — the programs that represent the most federal spending, the highest risk, or both.
Major programs are identified using a risk-based approach defined in 2 CFR 200.518.
Type A programs are the larger programs by dollar expenditure. The threshold is the higher of $750,000 or three percent of total federal expenditures. Programs above this threshold are Type A.
Type B programs are all other federal programs below the Type A threshold.
Your auditor then assesses which Type A and Type B programs are higher risk based on audit history, complexity of program requirements, and recent changes in personnel or systems. Higher-risk programs are selected for major program testing.
The practical implication: if you have one very large federal program, that program will almost certainly be a major program and will receive detailed compliance testing. If your portfolio is diversified across many smaller programs, major program selection is more nuanced.
The Schedule of Expenditures of Federal Awards (SEFA)
The SEFA is one of the core outputs of the Single Audit process. It lists every federal program from which you received funding during the fiscal year, organized by federal agency and CFDA number.
Each line on the SEFA includes:
- The federal agency name and CFDA number
- The program name
- The pass-through entity, if applicable
- Total federal expenditures during the period
- Whether the award is a cluster of programs
The SEFA is prepared by management, not the auditor. Your auditor reviews it for completeness and accuracy, but you are responsible for assembling it.
Preparing the SEFA accurately requires knowing every federal award active during the year, including pass-through awards. This means your award tracking cannot live solely in email and paper files. You need a system that records the federal program identifier, the pass-through entity (if any), and the amount expended by period.
Organizations that track grants in spreadsheets alongside their accounting system frequently have SEFA accuracy problems. Grants get missed when they are tracked informally. Expenditures get misattributed when the accounting system does not capture the CFDA number at the transaction level.
What the Auditor Tests
For each major program, your auditor tests compliance with applicable requirements from the 2 CFR 200 Compliance Supplement. The Supplement defines the compliance requirements for each federal program by CFDA number. The 12 standard compliance areas include:
- Activities allowed or unallowed
- Allowable costs and cost principles
- Cash management
- Eligibility
- Equipment and real property management
- Matching, level of effort, and earmarking
- Period of performance
- Procurement, suspension, and debarment
- Program income
- Reporting
- Subrecipient monitoring
- Special tests and provisions
Not all 12 apply to every program. The Compliance Supplement specifies which areas are relevant for each CFDA number. Your auditor's substantive testing focuses on the applicable requirements.
Findings and the Federal Audit Clearinghouse
Audit findings are formal conclusions by the auditor that a significant deficiency, material weakness, or compliance issue exists. In a Single Audit, findings fall into two categories.
Financial statement findings relate to internal controls over financial reporting and are the same type of findings that appear in any financial audit.
Federal awards findings relate to internal controls over compliance with federal program requirements, or material noncompliance with specific program requirements. These are unique to the Single Audit and are the ones that create the most concern for federal agencies.
All Single Audit reports are submitted to the Federal Audit Clearinghouse, where they are publicly accessible. Findings are visible to every federal agency, every pass-through entity, and any funder who searches your organization. A history of findings signals compliance risk and can affect future award decisions.
When a finding is issued, you must respond with a corrective action plan — a specific description of the steps you will take to address the finding and the timeline for implementation. Auditors review the prior year corrective action plan in subsequent audits to assess whether the issue was resolved.
The Documentation Gap
The Single Audit creates documentation demands that reveal weaknesses in grant management systems.
Controllers approaching the $750,000 threshold for the first time often discover that their grant tracking has relied on informal systems that work well enough for internal monitoring but cannot withstand audit scrutiny. Award letters are in email. Budget modifications are tracked in notes. Federal expenditures by CFDA number require manual reconstruction from accounting exports.
When federal auditors ask for transaction-level support for grant expenditures — showing exactly which costs were charged to a federal program, when, and why they were allowable — the answer needs to come from your accounting system, not from a spreadsheet maintained separately.
Grant-level tracking in sherbertOSOS captures the federal program identifier, CFDA number, and budget category on every grant-related transaction at entry. The Audit Trail shows every transaction, edit, and approval with timestamps. When auditors request transaction-level support for a major program, that documentation is a standard report pull, not a manual assembly project.
For the full audit preparation process, see Nonprofit Audit Preparation: The Complete Checklist. For the grant budget vs. actual reporting that feeds SEFA preparation, see Grant Budget vs. Actual Reporting: A Practical Guide.
Frequently Asked Questions
What is the threshold for a Single Audit?
$750,000 in federal expenditures during the fiscal year. This threshold was increased from $500,000 when Uniform Guidance replaced OMB Circular A-133 in 2014. The threshold applies to expenditures, not receipts.
What is the SEFA?
The Schedule of Expenditures of Federal Awards lists every federal program from which you received funding during the fiscal year, including the CFDA number, the federal agency, the pass-through entity (if applicable), and the amount expended. You prepare the SEFA; your auditor reviews it.
What happens if I get an audit finding?
Findings range from significant deficiencies in internal controls to material noncompliance with federal program requirements, including questioned costs. You must develop a corrective action plan. The finding and your response are submitted to the Federal Audit Clearinghouse and are publicly accessible.
Do pass-through awards count toward the $750,000 threshold?
Yes. Federal funds that flow through state agencies, local governments, or other pass-through entities count toward your threshold. The source of the dollars, not the entity that writes your check, determines whether an expenditure is federal.
What is the difference between a financial statement audit and a Single Audit?
A financial statement audit tests whether your overall financial statements are fairly presented. A Single Audit includes the financial statement audit and adds compliance testing of major federal programs against applicable requirements from the 2 CFR 200 Compliance Supplement.
How much more does a Single Audit cost than a standard audit?
Expect your audit fee to increase by $5,000 to $20,000 or more, depending on the number of major programs, the complexity of program requirements, and your organization's level of preparation. The compliance testing, SEFA preparation review, and findings reporting add substantial audit hours.
The Bottom Line
The Single Audit is not a more rigorous version of your existing audit. It is a different kind of audit with different objectives, different testing areas, and public consequences for findings. If your federal grant portfolio is approaching $750,000, build the systems and documentation practices now, before you cross the threshold.
The organizations that get through Single Audits without findings are not the ones with perfect operations. They are the ones whose grant management infrastructure tracks the right information at the right level of detail throughout the year, so that audit documentation is always current.
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Frequently Asked Questions
What is the threshold for a single audit?
$750,000 in federal expenditures during the fiscal year (increased from $500,000 under the old A-133 standard).
What is the SEFA?
The Schedule of Expenditures of Federal Awards lists every federal program from which you received funding, the CFDA number, and the amount expended during the period.
What happens if I get an audit finding?
Findings range from minor (internal control deficiencies) to severe (questioned costs, material noncompliance). You must develop a corrective action plan and the finding will appear in the Federal Audit Clearinghouse.
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