Single Audit Requirements: When They Apply

When a Single Audit Applies to Your Organization

Single audit requirements apply when your organization expends $1,000,000 or more in federal awards during its own fiscal year. 2 CFR 200.501(a) puts it in one sentence: “A non-Federal entity that expends $1,000,000 or more during the non-Federal entity’s fiscal year in Federal awards must have a single or program-specific audit conducted for that year” (Cornell Legal Information Institute, 2 CFR 200.501).

One test, one number, once a year.

The number is federal awards expended, not awarded and not received. And the single audit threshold that applies to you depends on when your fiscal year began.

Which fiscal year gets which threshold

This is a fiscal-year-beginning rule, not an award-date rule. OMB’s 2025 Compliance Supplement says the revision “increased the audit threshold to $1,000,000 for auditee fiscal years beginning on or after October 1, 2024” (OMB, 2025 Compliance Supplement, Part 1), effective on that date under OMB’s final guidance at 89 FR 30046 (Federal Register). Fiscal years that began earlier stay on the prior $750,000 threshold.

• Year ending June 30, 2025. It began July 1, 2024, before the effective date, so $750,000 governs it.
• Year ending June 30, 2026. It began July 1, 2025, so $1,000,000 governs it.
• Calendar-year organizations. A fiscal year beginning January 1, 2025 is already on the $1,000,000 threshold.

That’s the same organization on two different lines in consecutive years. Much of the published guidance frames this as an award-date question, as though an older award carried the old threshold along with it. It doesn’t. Find the first day of the fiscal year you’re testing, then apply the threshold in force on that day.

What counts as federal awards expended

2 CFR 200.502 sets the measurement: “The determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs.” The measure is the activity, not the deposit, so a reimbursement-basis grant and an advance-payment grant produce the same figure in the year the program work happens.

The section also counts assistance that never touches your operating account. Donated property at fair market value, food commodities, insurance while in force, free rent received as part of a federal program, federally restricted endowment balances counted cumulatively in every period, loans carrying continuing compliance requirements, and funds you disburse to subrecipients.

Pass-through money counts too. 2 CFR 200.332 requires the entity passing it down to give you the Federal Award Identification Number (FAIN), the Assistance Listings title and number, and the federal agency’s name. If something that looks like a state contract carries an Assistance Listing number and a FAIN, it’s federal money and it belongs in the total.

Below the threshold, and the audits that aren’t a single audit

Under 200.501(e), an organization expending less than $1,000,000 in a fiscal year is exempt from Federal audit requirements for that year, except as noted in 200.503. Exempt from the federal requirement isn’t the same as having no obligations. Your records must stay available for review by the federal awarding agency, the pass-through entity and the Government Accountability Office, and a federal agency, an Inspector General or GAO may arrange an additional audit under 200.503 and must fund its full cost.

A program-specific audit is the narrow alternative under 200.501(c), open to an organization expending federal awards under only one program that isn’t research and development. State rules run on their own track. The National Council of Nonprofits reports that state law audit requirements vary state by state, usually triggered by total revenue or total contributions and tied to charitable solicitation registration, so check with your state charity regulator or state auditor. And Form 990 is an information return, not an audit.

How the Single Audit Works Under 2 CFR 200 Subpart F

A single audit is two audits in one engagement: a financial statement audit plus a compliance audit of your major federal programs. That’s the short answer to what is a single audit, and the long one lives in Subpart F.

2 CFR 200.514 sets the scope. The work follows Generally Accepted Government Auditing Standards, the Yellow Book, and covers your entire operations or the units that handled federal awards. The auditor determines whether your financial statements are presented fairly under GAAP and whether your federal expenditure schedule is stated fairly in relation to them. Internal control and compliance testing, though, is scoped to major programs rather than every federal dollar.

What your organization prepares, and what the auditor performs

Read 2 CFR 200.510 first. Every item on it is your work product, not the auditor’s.

• Financial statements for the period audited, covering financial position, results of operations or changes in net assets, and cash flows.
• A schedule of expenditures of federal awards, for the same period those statements cover.
• A summary schedule of prior audit findings.
• A corrective action plan for current-year findings.

200.511 makes the auditee responsible for follow-up and corrective action on all audit findings, and 200.509 has your organization procure its own independent auditor. You build the schedules, select the auditor and own the corrective actions. The independent auditor performs the audit and issues the opinions.

The schedule of expenditures of federal awards

The schedule of expenditures of federal awards, or SEFA, is the center of gravity. It drives major program determination, the auditor opines on it, and it goes into the public reporting package. 200.510(b) requires, at minimum:

• Individual federal programs by federal agency with the applicable Assistance Listing numbers, or for a cluster, the cluster name and the programs inside it.
• For any award received as a subrecipient, the pass-through entity’s name and the identifying number it assigned.
• Total federal awards expended for each individual program, and the total provided to subrecipients from each.
• Loan and loan guarantee balances outstanding at the end of the audit period, identified in the notes.
• Notes on the significant accounting policies used to prepare the schedule, and whether you elected the de minimis indirect cost rate of up to 15 percent of modified total direct costs.

That last disclosure is where the nonprofit indirect cost rate turns up inside a single audit. Its own mechanics we cover separately.

How the auditor picks your major programs

2 CFR 200.518 has the auditor use a risk-based approach, weighing current and prior audit experience, agency and pass-through oversight, and each program’s inherent risk. The first step is mechanical. Programs at or above the Type A threshold are Type A and the rest are Type B, and for an organization that has just crossed the audit threshold, the Type A threshold equals the audit threshold. Your largest program is very likely your one major program. The auditor is only required to risk-assess Type B programs exceeding 25 percent of the Type A threshold. Programs selected as major must cover at least 40 percent of total federal awards expended, or 20 percent if you qualify as a low-risk auditee.

The reporting package, the deadline and the Federal Audit Clearinghouse

2 CFR 200.512(a) reads: “The audit, the data collection form, and the reporting package must be submitted within 30 calendar days after the auditee receives the auditor’s report(s) or nine months after the end of the audit period (whichever is earlier).” Two competing dates, and the earlier one wins, so a report that arrives early shortens the deadline rather than giving you more time. A cognizant or oversight agency for audit may authorize an extension where the nine-month timeframe would create an undue burden, and a due date falling on a weekend or federal holiday moves to the next business day. The same text appears in the 2025 edition of the Code of Federal Regulations (govinfo.gov).

The package goes to the Federal Audit Clearinghouse at fac.gov, operated by GSA’s Technology Transformation Services, which launched the new clearinghouse in October, 2023. 200.512(b) names the FAC the repository of record.

A Worked Example: Testing the Threshold at a Fictional Organization

Riverbend Youth Services is a fictional 501(c)(3) with a December 31 fiscal year end. Its fiscal years begin on January 1, so both years below sit on the current $1,000,000 threshold, and every figure here is a share of it.

In February of year one, Riverbend receives a direct federal award in one payment. The obligated amount equals 85 percent of the threshold. The program runs across two years, and by December 31 the organization has spent program funds equal to 30 percent. Federal awards expended for year one: 30 percent. No single audit required. The executive director had budgeted for one anyway, because the award letter looked like it cleared the line.

In year two, Riverbend finishes the first award, spending the remaining 55 percent, then starts a second direct award and spends 30 percent on it. Running total: 85 percent. Under the line again, and the finance manager tells the board the organization is clear for another year.

Then the close turns up a youth workforce program funded by a subaward from the state health department. The contract carries the state’s name and a state contract number, and the revenue had been coded as state revenue for three straight years. Page two carries an Assistance Listing number and a FAIN, the identifiers 200.332 requires a pass-through entity to provide. Spending on that program equals 25 percent of the threshold. Federal awards expended for year two: 110 percent. Single audit required.

A receipts test inverts the answer in both years. It flags year one at 85 percent, when nothing was owed, and understates year two by 55 percentage points, when a single audit was. The pass-through award is the easiest one to miss, and the Assistance Listing number and the FAIN are how you tell. Riverbend found its missing 25 percent in December. An organization that reconciles its grant accounts monthly knows in month three.

A June 30 year end changes the line before you test anything. The year ending June 30, 2025 began on July 1, 2024, so the prior $750,000 threshold applies. The year ending June 30, 2026 began on July 1, 2025, so the $1,000,000 threshold applies.

Common Single Audit Mistakes and How to Avoid Them

Single audit requirements for nonprofits are mechanical, and almost every expensive problem is a tracking problem that surfaced too late to fix cheaply. None of these are carelessness. They’re what happens when one person carries the close, the grant reports and the Form 990 at once.

1. Testing the threshold on money received or awarded. 200.502 measures activity. Multi-year awards and reimbursement-basis grants both break a receipts test.
2. Leaving pass-through awards out of the federal total. The money arrived from a state agency or a larger nonprofit, so it got coded as state or foundation revenue. The FAIN and the Assistance Listing number are the tell.
3. Missing the non-cash items in 200.502. Donated property, food commodities, insurance in force, cumulative federally restricted endowment balances and loans with continuing compliance requirements. No cash moves, so nothing prompts an entry.
4. Treating the SEFA as the auditor’s schedule. 200.510(b) puts it on the auditee and 200.514(b) has the auditor opine on it. Waiting for the auditor to build the schedule they’re auditing costs weeks.
5. Planning for the nine-month date. The deadline is the earlier of the two dates in 200.512(a), and a report that lands early moves it up. A late submission also breaks 200.520(a) and costs low-risk auditee status.
6. Carrying prior-year findings forward with nothing attached. 200.511 wants the status of every prior finding, plus a corrective action plan naming the person responsible, the action to be taken and the anticipated completion date.
7. Assuming the audit cost is chargeable to the grants. 200.425 allows a reasonably proportionate share of a required audit performed in accordance with the Single Audit Act Amendments of 1996, and makes auditing an organization that expended less than $1,000,000 unallowable except in limited circumstances.

General audit preparation is a bigger subject than this page. Our nonprofit audit preparation checklist covers the document requests, the timeline and the meetings, and the audit-ready webinar for nonprofits walks through it with a finance team in mind.

What the Board and Auditors Expect From a Single Audit

A single audit produces four auditor reports and one schedule of findings. 2 CFR 200.515 requires an opinion, or a disclaimer, on whether the financial statements are presented fairly under GAAP, plus a determination on the SEFA. A report on internal control over financial reporting and on compliance. A report on compliance for each major program and on internal control over compliance. And a schedule of findings and questioned costs. That third report is new ground for a board that has only reviewed a financial statement audit. It’s an opinion on compliance, program by program, and it’s the part a funder reads.

What gets written up as a finding

2 CFR 200.516 lists what the auditor must report. Known questioned costs above the regulation’s reporting threshold, significant deficiencies and material weaknesses in internal control over major programs, material noncompliance, the circumstances behind any compliance opinion that is not unmodified, known or likely fraud affecting a federal award, and a summary schedule that materially misrepresents the status of a prior finding. Every finding carries a defined set of elements, and two are governance-relevant. The auditor must include recommended corrective action, and the views of responsible officials of the auditee. 200.516(b) also requires each finding to be described in enough detail for your organization to prepare a corrective action plan and for the federal agency to reach a management decision. Your organization gets to put its position on the record.

Three questions a treasurer or finance committee should ask

1. “What is our running total of federal awards expended this year, and what percentage of the threshold is it?” A good answer is a number with a date and a named owner on it, updated monthly, with direct and pass-through awards broken out. The document is the in-progress SEFA.
2. “Do we still qualify as a low-risk auditee, and what would cost us that status?” 2 CFR 200.520 requires, for each of the two preceding audit periods, annual Subpart F audits filed with the FAC inside the 200.512 window, unmodified opinions on the financial statements and the SEFA, no material weaknesses under GAGAS, no going-concern doubt and no disqualifying Type A findings. Losing the status raises required major-program coverage from 20 percent of federal awards expended to 40 percent.
3. “Which prior-year findings are still open, who owns each one, and what is the completion date?” The proof is the summary schedule of prior audit findings and the corrective action plan, both your documents, with a name and a date on every line.

Settle one more thing before submission. 200.512(b) requires a senior-level representative of the auditee to certify that the data collection form was prepared correctly and holds no protected personally identifiable information, and to authorize public release through the FAC. The package becomes publicly searchable, so plan for it alongside your other board and funder reporting.

How Indinero Supports Single Audit Preparation

Indinero prepares your organization for its audit. Your independent auditor performs it. Under 2 CFR 200.509 your organization selects and procures that auditor itself, and nothing about working with indinero changes who signs the opinion.

Preparation looks like an experienced finance team plus the Exchange, indinero’s client platform. Your controller leads the monthly review, the close and your audit preparation. A senior accountant records gifts, grants and bills and reconciles every account. A nonprofit CFO advisor handles budgets, reserves, board preparation and grant reviews. A tax specialist supports Form 990 preparation and answers your team’s tax questions, and does not file or sign the return.

With indinero, every schedule your auditor will request is tracked all year, with an owner and the evidence for each. Books closed every month, every account reconciled, functional expenses allocated every month, restricted grants tracked and reconciled monthly. That monthly grant reconciliation is what produces a running federal-awards-expended total instead of a December surprise.

There are two scopes. Indinero can run the full finance function, or provide support for your team alongside existing staff, which includes help during audit season and grant deadlines. An organization crossing the 200.501 threshold for the first time is usually in the second.

Indinero documents your close checklist, grant schedules and policies in the Exchange, so your finance process doesn’t live with one person. Firm-wide: 150+ delivery professionals, 18 days average to onboard, 5+ years average client partnership, SOC 2 compliant.

The people on your indinero team look at your books through a nonprofit eye, with a nonprofit CFO advisor reviewing your budgets, reserves and grant applications. The full scope sits on indinero’s nonprofit accounting services page.

Walk into audit season ready. If a new federal award just moved your organization toward the threshold, that’s worth a conversation. Talk to an Expert about your fiscal year, your upcoming audit and where your schedules stand today.

Frequently asked questions

These are the questions finance teams and boards ask most often once federal money is in the picture. Each answer names the section of 2 CFR Part 200 that governs it, and anything specific to your organization belongs with your independent auditor, your counsel or your awarding agency.

Does the single audit threshold count federal awards received or spent?

Federal awards expended, not received, decide the single audit threshold under 2 CFR 200.501(a), measured across your organization’s own fiscal year. 2 CFR 200.502 measures expenditure by when the activity related to the award occurs, so a lump sum received once and spent across two program years counts in both. The threshold also attaches to the fiscal year, so a June 30 year-end organization is tested against $750,000 for the year ending June 30, 2025 and $1,000,000 for the year ending June 30, 2026.

Do federal funds passed through a state agency count toward the threshold?

Yes, federal funds passed through a state agency count toward the same 2 CFR 200.501 total as awards received directly from a federal agency. A subaward from a state agency, a county or a larger nonprofit is still federal money expended, and it carries its own Assistance Listing number. This is the most commonly missed item in a threshold test, because the money arrives from a state and reads as state revenue, so trace every award to its original federal source.

When is the single audit reporting package due?

Submit the single audit reporting package within 30 days of receiving the auditor’s report or nine months after the audit period ends, whichever is earlier. 2 CFR 200.512(a) sets both dates, 30 calendar days or nine months, and the earlier one governs, so a report that arrives early shortens the deadline rather than extending it. The package goes to the Federal Audit Clearinghouse at fac.gov, and a cognizant or oversight agency may authorize an extension where nine months would create an undue burden.

What is the Schedule of Expenditures of Federal Awards?

The Schedule of Expenditures of Federal Awards, or SEFA, is the schedule your organization prepares listing every federal award it expended during the fiscal year. 2 CFR 200.510(b) sets what it must contain, including each program by federal agency with its Assistance Listing number, the pass-through entity’s name and identifying number for any subaward, totals passed to subrecipients, and notes on the accounting basis and whether you elected the de minimis indirect cost rate. It is your document, not the auditor’s.

What applies to an organization that spends federal money below the threshold?

An organization expending less than $1,000,000 in federal awards during its fiscal year is exempt from federal audit requirements for that year. That exemption comes from 2 CFR 200.501(e), subject to the exception in 200.503, and your records must stay available for review by the federal awarding agency, the pass-through entity and the Government Accountability Office. Award terms and state audit rules can still require an audit, and state triggers vary, so check with your awarding agency and your state charity regulator.

Who chooses and pays the auditor for a single audit?

Your organization chooses and pays for the auditor, because 2 CFR 200.509 has the auditee procure its own independent auditor for a single audit. Follow the procurement standards in Subpart D, weigh the auditor’s qualifications and peer review results, and note that 2 CFR 200.425 generally allows a reasonably proportionate share of a required single audit as a charge to federal awards. Indinero prepares your organization for the audit, and your independent auditor performs it.