When Does a Nonprofit Need a Single Audit?

A nonprofit generally needs a Single Audit when it expends $1 million or more in federal awards during a fiscal year beginning on or after October 1, 2024.

For fiscal years beginning before October 1, 2024, the previous threshold of $750,000 generally applies.

The key word is expends.

The threshold is based on federal awards expended during the fiscal year—not the nonprofit’s total revenue, total grant awards, or simply the amount of cash received.

What Is a Single Audit?

A Single Audit is an audit performed under the federal Uniform Guidance for certain nonfederal entities that expend significant federal awards.

It combines:

an audit of the organization’s financial statements;
an audit of the Schedule of Expenditures of Federal Awards, or SEFA;
consideration of internal control over compliance; and
testing of compliance requirements for selected major federal programs.

Single Audits are governed primarily by 2 CFR Part 200, Subpart F.

The Federal Audit Clearinghouse identifies nonprofit organizations as one of the types of entities subject to these requirements when the applicable expenditure threshold is met.

The Current Single Audit Threshold

For fiscal years beginning on or after October 1, 2024, the threshold is:

$1,000,000 of federal awards expended during the fiscal year.

The threshold increased from $750,000 as part of the 2024 revisions to the Uniform Guidance.

For example, a nonprofit with a calendar year ending December 31, 2025 has a fiscal year that began January 1, 2025.

Because that fiscal year began after October 1, 2024, the $1 million threshold applies.

The Threshold Is Not Based on Total Revenue

A nonprofit does not need $1 million of total revenue to trigger a Single Audit.

Conversely, a large nonprofit does not automatically need a Single Audit simply because its annual revenue exceeds $1 million.

Consider two organizations:

Organization A

Total annual revenue: $8 million
Federal awards expended: $400,000

Based on federal expenditures alone, the organization generally would not meet the $1 million Single Audit threshold.

Organization B

Total annual revenue: $2 million
Federal awards expended: $1.2 million

Organization B generally would meet the threshold even though its total organizational revenue is much smaller.

The analysis is driven by federal awards expended, not organization size.

What Counts as a Federal Award?

Federal funding may come directly from a federal agency or indirectly through another organization.

A nonprofit may receive federal funding from:

a federal agency;
a state agency;
a county or municipality;
another nonprofit;
a university;
or another pass-through entity.

That means funding does not have to arrive directly from the federal government to count as a federal award.

This is one reason nonprofits should review the underlying grant agreement and award documentation rather than relying only on the name of the organization sending the payment.

What Does “Expended” Mean?

Determining federal expenditures can require more analysis than simply looking at cash receipts.

Depending on the type of award, expenditure treatment may involve:

grant expenditures;
cost-reimbursement awards;
federal loans;
loan guarantees;
noncash assistance;
federally funded insurance; or
other forms of federal financial assistance.

The applicable Uniform Guidance rules determine when federal awards are considered expended.

Organizations with loans or unusual federal assistance should evaluate those rules carefully rather than assuming the cash received during the year equals federal expenditures. The Federal Audit Clearinghouse specifically points organizations to 2 CFR 200.502 for expenditure treatment involving loans.

What If Federal Funding Comes Through the State?

It can still count.

Many nonprofits receive federal funds through state or local government agencies rather than directly from the federal government.

This is commonly called pass-through funding.

For example, a Washington nonprofit might receive a grant from a state agency that is ultimately funded by a federal program.

The grant documentation should identify information such as:

the federal awarding agency;
Assistance Listing Number, or ALN;
federal program name;
pass-through entity;
federal award identification number, when applicable; and
whether the award is federal.

Organizations should not assume that a grant is nonfederal simply because the payment came from Washington State or another intermediary.

What Is the SEFA?

Organizations subject to a Single Audit prepare a Schedule of Expenditures of Federal Awards, commonly called the SEFA.

The SEFA identifies the federal awards expended during the fiscal year and is a central component of the Single Audit.

The Federal Audit Clearinghouse describes the SEFA as the financial schedule listing the federal award expenditures an entity spent during its fiscal year.

A strong federal award tracking process makes SEFA preparation much easier.

Throughout the year, nonprofits should consider tracking:

federal agency;
program name;
Assistance Listing Number;
pass-through entity;
grant or award number;
award period;
expenditures during the year; and
whether funds were passed through to subrecipients.

Is Every Federal Program Tested?

Not necessarily.

A Single Audit does not mean the auditor performs detailed compliance testing on every federal program the organization operates.

The auditor uses the major program determination requirements under the Uniform Guidance to identify which programs require detailed testing.

That determination considers factors including the amount of federal expenditures and the risk associated with particular programs.

The result is a risk-based audit focused on selected major programs.

What Does the Auditor Test?

For major federal programs, the auditor evaluates compliance with requirements that could have a direct and material effect on the program.

Depending on the program, those requirements may involve areas such as:

allowable costs;
eligibility;
reporting;
procurement;
cash management;
matching requirements;
subrecipient monitoring;
period of performance; and
other program-specific compliance requirements.

The federal Compliance Supplement helps auditors identify the compliance requirements the federal government expects to be considered for applicable programs.

Does a Single Audit Replace the Financial Statement Audit?

A Single Audit generally includes the organization's financial statement audit along with the additional federal compliance work required under Uniform Guidance.

That means the engagement is broader than a standard financial statement audit.

The auditor evaluates both:

Financial reporting

and

Compliance with requirements applicable to major federal programs.

Because of that additional scope, Single Audits typically involve more planning, documentation, testing, reporting, and audit effort than a standard financial statement audit.

What Happens After the Audit?

Single Audit reporting is submitted to the Federal Audit Clearinghouse, or FAC.

The FAC is the federal repository for Single Audit submissions.

The submission includes information about:

the auditee;
financial statement audit results;
federal programs;
major programs;
findings, if any;
the audit reporting package; and
related Single Audit information.

The organization and auditor each have responsibilities in completing and certifying the submission.

How Should a Nonprofit Prepare?

Organizations receiving federal funding should not wait until year-end to determine whether they crossed the threshold.

Throughout the year, management should:

identify every federal award;
distinguish federal from nonfederal funding;
track federal expenditures by award;
retain grant agreements;
capture Assistance Listing Numbers;
identify pass-through funding;
monitor subrecipients when applicable;
understand key compliance requirements;
maintain supporting documentation; and
estimate total federal expenditures before year-end.

If expenditures appear likely to approach $1 million, management should discuss the situation with its CPA firm before the fiscal year closes.

Common Single Audit Mistakes

Some common problems include:

tracking federal cash receipts instead of federal expenditures;
missing federal funds received through a pass-through entity;
incomplete Assistance Listing information;
failing to maintain a complete federal award schedule;
waiting until after year-end to prepare the SEFA;
failing to understand grant compliance requirements; and
assuming a standard financial statement audit automatically satisfies Single Audit requirements.

Strong grant accounting throughout the year can prevent many of these problems.

The Bottom Line

For fiscal years beginning on or after October 1, 2024, a nonprofit generally becomes subject to the Single Audit requirements when it expends $1 million or more in federal awards during the fiscal year.

The threshold is based on federal expenditures—not total revenue and not simply federal cash received.

Nonprofits that receive federal funding directly or through pass-through entities should track federal awards throughout the year so they can identify a potential Single Audit requirement early.

How Bilotta & Company Can Help

Bilotta & Company, CPAs, LLC provides financial statement audits and Single Audits for nonprofit organizations.

We work with nonprofit leadership teams to understand federal funding, evaluate Single Audit requirements, prepare for the audit process, and identify the information needed for an accurate SEFA.

Organizations approaching the federal expenditure threshold benefit from addressing the requirement before year-end rather than discovering it after the books are closed.

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This article is provided for general educational purposes and should not be considered accounting, legal, or compliance advice for a specific federal award or organization. Federal award requirements can vary based on the award terms, funding source, and applicable regulations.