Single Audits – When Do You Need One

Organizations that receive federal funding carry a serious responsibility to ensure those funds are managed properly. A single audit is a critical process that examines whether funds are used in line with the rules that accompany them. This type of audit protects both the funding agency and the organization by confirming that financial reports are accurate and that money is spent for its intended purpose.

Beginning with fiscal years starting on or after October 1, 2024, the federal expenditure threshold that triggers a single audit rises to $1,000,000. The previous threshold of $750,000 will still apply to earlier fiscal years. This change affects many different groups, including nonprofits, construction companies, healthcare providers, and other entities supported by federal programs.

Understanding single audit requirements is essential for avoiding compliance problems, penalties, and potential loss of funding. Whether managing a large grant or overseeing a federal contract, many organizations find that working with an experienced Orlando CPA or the best CPA in Orlando ensures smoother audits and stronger compliance.

What is a Single Audit?

A single audit is a specific type of review established under the Uniform Guidance (2 CFR Part 200). It combines two processes: a financial statement audit and a compliance audit. This approach allows both financial accuracy and adherence to federal rules to be checked at the same time.

The requirement applies to non-federal entities that meet or exceed the federal expenditure threshold during a fiscal year. The process is designed to give a complete view of how an organization manages both its finances and the obligations tied to its federal awards.

What is a Single Audit of Federal Expenditures?

A single audit of federal expenditures is a detailed examination of how federal funds are used. These funds might come directly from a federal agency or indirectly through another entity as pass-through funds. The review typically includes:

• Checking that expenses follow the terms of the award or grant.
• Reviewing the systems and controls in place to protect funds from misuse.
• Confirming that reporting and documentation meet federal requirements.

For example, if a healthcare provider receives a federal research grant, the single audit will check that spending relates only to approved research activities and that safeguards are in place to prevent improper charges.

Purpose and Objectives of a Single Audit

Single audits serve as a safeguard for public resources, ensuring that federal money is used correctly and efficiently. They also help organizations identify areas where internal processes can be improved for better compliance and operational efficiency.

What is the Purpose of a Single Audit?

The purpose of a single audit is to confirm that an organization complies with the legal and financial terms of its federal awards. It also verifies that all funds are spent in accordance with applicable laws, grant conditions, and program guidelines. This process strengthens accountability and reassures funding agencies that their grants are being managed responsibly.

For organizations, completing the process successfully can reinforce credibility and strengthen relationships with funding agencies.

Objectives of a Single Audit

The main objectives include:

• Reviewing compliance with the specific requirements of each federal program.
• Testing internal controls to confirm they’re effectively managing program funds.
• Identifying any costs that may not be allowable under the terms of the award.

These objectives help detect weaknesses early, giving organizations the opportunity to correct them before they threaten future funding.

When Do I Need a Single Audit?

Determining when a single audit is required depends on how much federal funding your organization has spent within a fiscal year. The key factor is the amount expended, not the amount received.

The $1,000,000 Federal Expenditure Threshold

Starting from fiscal years that begin on or after October 1, 2024, a single audit will be necessary if federal spending hits $1,000,000 or more within that year. This higher threshold replaces the $750,000 limit that applies to earlier periods.

The calculation includes all federal awards expended, whether the funds come directly from a federal agency or pass through another organization. This total determines whether the audit requirement is triggered.

How Do You Know if a Single Audit is Required?

To decide if your organization must arrange a single audit:

1. Calculate the total federal funds spent during the fiscal year.
2. Include both direct federal awards and pass-through funds.
3. Compare that total to the threshold for your fiscal year.

Organizations that meet or exceed the threshold must complete the audit. This requirement applies to state and local governments, nonprofit groups, tribal governments, and higher education institutions.

Industry Examples

Some organizations are more likely to cross the threshold due to the size or nature of their federal funding. Examples include:

• Nonprofits delivering social or community services funded by federal grants.
• Healthcare organizations receiving research or public health funds.
• Construction or engineering firms working on federally financed infrastructure projects.

Working with a knowledgeable Orlando CPA or an established accounting firm in Orlando can help these entities prepare for the process and avoid surprises.

Who Needs a Single Audit?

If you’re a non-federal entity and you spend $1,000,000 or more in federal awards during a fiscal year starting on October 1, 2024, you’ll need to undergo a single audit. For any years before that, the threshold is set at $750,000.

This includes:

• State and local governments manage federal programs.
• Nonprofit organizations operating federally funded initiatives.
• Native American tribes with federal program responsibilities.
• Colleges and universities are conducting federally sponsored research.

Meeting single audit requirements is not optional once the threshold is reached, and preparation is essential to ensure the audit process goes smoothly.

Key Components of a Single Audit

A single audit has two major components that work together to provide a complete picture of an organization’s financial health and compliance with federal requirements.

Financial Statement Audit

The GAAS and the generally accepted government auditing standards are followed when conducting the financial statement audit. The main goal is to assess whether the organization’s financial statements accurately reflect its financial position.

This part of the audit involves reviewing accounting records, testing transactions, and confirming that the organization follows proper accounting practices. Partnering with the best CPA in Orlando can help ensure that this phase of the audit is handled efficiently and thoroughly.

Compliance Audit

The compliance audit reviews whether the organization followed all applicable federal program requirements. It involves:

• Checking that costs meet the guidelines of the grant or program.
• Evaluating the systems in place to manage compliance.
• Reviewing supporting documentation for transactions.

Strong compliance procedures and complete records are essential to passing this part of the single audit.

Preparing for a Single Audit

Good preparation can reduce stress and help the audit process move more quickly.

Documentation & Recordkeeping

Successful audits depend on having organized and complete records. Keep:

• Signed grant agreements and award documents.
• Detailed expenditure reports.
• Invoices, receipts, payroll records, and other supporting evidence.

Having documentation readily at hand allows auditors to work more efficiently, cutting down on the likelihood of delays or any surprises in their findings.

Strengthening Internal Controls

Internal controls refer to the set of policies and procedures put in place to safeguard program funds and ensure everything is in line with regulations. To strengthen these controls:

• Establish clear written procedures for managing grants.
• Train staff to follow compliance requirements consistently.
• Conduct internal reviews to identify and correct issues.

A commitment to strong internal controls helps safeguard funding and build a track record of responsible program management.

The Value of Professional Audit Compliance Services

Many organizations turn to professional audit compliance services for help with the complex requirements of a single audit. These services can make the difference between a smooth review and a process filled with complications.

If you’re looking for accounting firms in Orlando that know their way around federal compliance, you’re in luck! They can help you with everything from preparing the Schedule of Expenditures of Federal Awards to pinpointing major programs for review and even conducting pre-audit readiness checks.

Why Choose the Best CPA in Orlando

Selecting the best CPA in Orlando brings advantages that go beyond standard accounting support:

• Knowledge of compliance rules for specific industries such as construction, nonprofit, and healthcare.
• Skill in handling complex reporting requirements.
• A proactive approach that helps address problems before they become issues.

Beyond the Single Audit

The single audit process often uncovers opportunities to improve financial systems, plan more effectively, and streamline operations. By acting on these insights, organizations can strengthen their overall management practices while maintaining compliance.

How Davis Group Supports Your Single Audit Needs

Davis Group works closely with organizations throughout the single audit process. Our team understands the technical requirements of OMB Uniform Guidance (2 CFR 200) and can guide clients through every step.

We assist with:

• Planning the audit and preparing documentation.
• Determining which programs require detailed testing.
• Reviewing internal controls for effectiveness.
• Preparing the SEFA accurately.
• Submit the SF-SAC form electronically.

Our clients include nonprofits, healthcare providers, housing authorities, and other federally funded organizations in Orlando, Central Florida, and beyond. By offering reliable audit compliance services, we help clients remain audit-ready and confident in their financial practices.

Final Thoughts

A single audit is an essential safeguard for organizations that spend significant amounts of federal funds. With the new threshold of $1,000,000 coming into effect for fiscal years beginning on or after October 1, 2024, organizations should take the time to evaluate their expenses to see if they are subject to this requirement.

The process demands careful preparation, strong internal controls, and professional guidance from an experienced Orlando CPA or the best CPA in Orlando. Focusing on readiness when approaching the audit helps ensure compliance and can also lead to better financial management and more successful program outcomes.

Partner with Davis Group for expert single audit guidance that keeps your organization compliant, confident, and ready for future funding. Contact our Orlando team today to work with the best CPA in Orlando for federal grant compliance.