Single Audit and Funding Considerations for Organizations
The pandemic brought with it many challenges, but it also came with opportunities for organizations to receive funding from sources they might not have sought in the past. These sources include funding from governmental agencies, which can come with certain requirements.
What is a single audit?
A single audit is an audit over an organization’s internal control over financial reporting and on compliance over program requirements. The purpose is to provide assurance to the government that dollars are being used in accordance with program requirements and that an organization has the proper internal controls in place. A single audit consists of various tests of detailed internal controls and compliance with grant requirements. An organization can identify a program’s specific compliance requirements from the compliance supplement issued annually by the Office of Management and Budget.
Single Audit Thresholds
A federal single audit is needed if an organization expends more than $750,000 of federal awards during its fiscal year. It is important to note that this threshold is based on funds expended and not the amount of funds that were received. A state single audit may also be required if an organization receives funds that originated in a state agency. There are different thresholds by state, so it is important for an organization to also be aware of their respective state thresholds and compliance requirements as well.
Source of Funds
Where did this cash originate? This is one of the first questions an organization will want to ask when seeking out new funding. This is important because the original source of the funds is what will trigger a single audit requirement. Organizations sometimes have a hard time tracking this specific information because there can be pass-through entities that directly obtain funding from a government agency themselves and subsequently grant this money to another organization. These pass-through entities can be nonprofit organizations, and they can also be state agencies.
Has your organization received funds from a government agency for the first time? Are you unsure if these funds could trigger a single audit? CLA has many years of experience in conducting single audits for our clients. We audited nearly $93 billion in federal funds in 2020 or over 1,300 single audits performed. We can help!
Other grant and grant management posts:
Grant Management Miniseries – Part I | CLA (CliftonLarsonAllen) (claconnect.com)
Grant Management Miniseries Part II | CLA (CliftonLarsonAllen) (claconnect.com)
Grant Management Miniseries Part III | CLA (CliftonLarsonAllen) (claconnect.com)
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