Key Takeaways
- A Single Audit is required for any nonprofit that expends $1 million or more in federal awards in a single fiscal year.
- “Expended” has a specific meaning under federal guidelines — and it includes pass-through funds from state and local agencies, not just direct federal grants.
- Falling below the threshold doesn’t mean compliance obligations disappear. Funders, boards, and state regulators may still require audit activity.
- A Single Audit is more than a financial statement audit — it includes compliance and internal control testing on your major federal programs.
- If your organization’s federal funding is anywhere near the $1 million mark, ongoing tracking and early conversations with your advisor are essential.
If your nonprofit receives federal funding, you’ve probably heard the term “Single Audit” — maybe from a grant agreement, a board member, or your auditor. But for many nonprofit leaders, especially those who didn’t come up through the finance side, the concept can feel murky. What exactly is a Single Audit? Who has to have one? And what does it actually involve?
Let’s break it down.
What Is a Single Audit?
A Single Audit is a comprehensive, independent audit that examines both your organization’s financial statements and its compliance with the federal grants it has received. It goes beyond a standard financial audit; reviewing how federal dollars were used, whether your internal controls are sound, and whether your organization followed the specific rules attached to each federal program.
The “single” in Single Audit refers to the fact that this one audit covers all of an organization’s federal programs together, rather than requiring a separate audit for each grant. It was designed to streamline the process for organizations managing multiple federal funding sources at once.
Single Audits are governed by the OMB’s Uniform Guidance (2 CFR Part 200) and must adhere to Generally Accepted Government Auditing Standards, commonly known as the Yellow Book. The results are submitted to the Federal Audit Clearinghouse, where they become part of the public record.
Who Has to Have One?
A Single Audit is required for any nonprofit that expends $1 million or more in federal awards during a fiscal year. This threshold was updated by the Office of Management and Budget in 2024 and has been in effect for fiscal years beginning on or after October 1, 2024. For calendar-year organizations, it applies starting with fiscal year 2025.
Simple enough on the surface, but the question of what counts toward that $1 million is where many organizations get tripped up.
What Counts as “Federal Awards”?
Federal awards don’t just mean money received directly from a federal agency. They also include pass-through funds — dollars that originate at the federal level but flow to your organization through a state agency, a local government, or even another nonprofit acting as a pass-through entity.
If your organization receives and spends a grant from the Ohio Department of Job and Family Services and those dollars are federally sourced, they count toward your threshold. The same goes for Community Development Block Grants distributed through a city or county, or federal education dollars flowing through a school district.
Medicaid and Medicare payments for patient care are generally excluded from the calculation, but most other forms of federal financial assistance are not.
The bottom line: before you assume you’re under the threshold, make sure you have a complete and accurate picture of all your funding sources and how they’re classified.
What Does a Single Audit Actually Involve?
If your organization does trigger the Single Audit requirement, here’s what to expect.
Your auditor will examine your financial statements and issue an opinion, just as in a standard audit. But they’ll also review your Schedule of Expenditures of Federal Awards (known as the SEFA) or assist you in preparing your SEFA depending on the terms of the engagement, which lists every federal program your organization participated in and how much was expended. From there, your auditor identifies your “major programs” based on expenditure levels and risk and conducts compliance and internal control testing on those programs.
Compliance testing looks at things like allowable costs, eligibility determinations, reporting requirements, and subrecipient monitoring — essentially, whether you followed the rules that came with each grant. If issues are found, they’re documented as findings, and your organization is required to develop a corrective action plan.
The completed Single Audit must be submitted to the Federal Audit Clearinghouse within the earlier of 30 days after receiving the auditor’s report, or nine months after the end of your fiscal year.
I’m Below the Threshold. Am I Off the Hook?
Not entirely. Falling below $1 million means you’re not federally required to undergo a Single Audit, but it doesn’t mean your compliance obligations disappear.
Individual grant agreements sometimes include audit requirements regardless of the federal threshold. Ohio has its own audit landscape that may apply to your organization. And your board, finance committee, or major donors may reasonably expect some form of independent financial review as a matter of good governance.
Beyond the technical requirements, staying audit-ready year-round just makes good organizational sense. Clean records, solid internal controls, and accurate grant tracking protect your organization and build the kind of credibility that supports long-term funding relationships.
What Should You Do Now?
Whether you’re well above the $1 million threshold, right on the edge, or comfortably below it, a few habits go a long way.
Know your numbers. Track your federal expenditures throughout the year, not just at year-end. If you’re approaching the threshold, you want to know early.
Understand your award terms. Review each grant agreement for any audit requirements that apply regardless of the federal threshold. Don’t assume federal guidelines are the only rules in play.
Keep your SEFA current. Your Schedule of Expenditures of Federal Awards should accurately reflect all federal award activity for the year. Gaps or inaccuracies here can create compliance headaches down the road.
Talk to your advisor. If you’re unsure whether a Single Audit applies to your organization, that’s exactly the conversation to have before year-end, not after.
Federal compliance requirements can be complex, and every organization’s situation is a little different. If you have questions about your audit obligations, contact Rea or reach out to your Rea advisor directly.
About the Author
Jacob Self is an Audit Manager at Rea, based in the Dublin, Ohio office, where he has spent more than five years working alongside nonprofit organizations navigating the complexities of financial reporting and federal compliance. With deep experience in Single Audits, nonprofit accounting, and financial statement audits, Jacob brings both technical knowledge and a practical perspective to every engagement. He works closely with nonprofit leaders to help them understand not just what the rules require — but why they matter and how to stay ahead of them.
Have questions about your organization’s Single Audit obligations? Reach out to Jacob or contact the Rea team. We’re here to help.
