If your organization has received a significant amount of federal dollars from the CARES Act and other COVID-19-related legislation, it may be a bit overwhelming to realize that you’re now subject to what’s known as a single audit. Receipt of these funds may trigger an audit requirement under the Single Audit Act, which was enacted to streamline and improve the effectiveness of audits of federal awards.
What is the difference between an audit and a single audit?
Honestly, if you feel an audit is like going to the dentist, a single audit is like getting a root canal. Whether or not you knew it at the time, when you accepted money from the federal government, you agreed to follow several rules around how the money was tracked, spent and reported. And your auditor is going to be required to double and triple check that you adhered to all of these rules and have placed additional processes in place to ensure compliance with these rules.
Per Uniform Guidance regulations, here are some additional single audit requirements:
- Additional internal control processes will be needed to ensure compliance for major programs, and any findings will be disclosed in your financial statements
- Identification of the funds received and the major programs under which the funds were received via a schedule of expenditures of federal awards (SEFA)
- Identifying programs as either Type A or Type B
- Knowledge of federal statutes, regulations and terms and conditions of the federal awards
- Disclosure in your financial statements of any findings and follow up on any prior-year findings
- Preparation and submission of a data collection form directly to the Federal Audit Clearinghouse at the completion of the audit
When is a single audit required?
A single audit is required if a non-federal entity (e.g., not-for-profit organization, state and local government, tribe or institution for higher education) spends greater than $750,000 of federal funds in a fiscal year.
In certain circumstances, a program-specific audit can be approved by a funder. It does not matter if the organization receives the funds directly or indirectly; each year the organization is required to add all federal dollars spent when calculating the $750,000. It is also important to note that this $750,000 includes cash and non-cash assistance.
Need assistance with a single audit?
In 2020 we saw an increase in federal non-cash assistance in the form of PPE and food being donated to foodbanks. If you are struggling to figure out whether a funding stream is considered federal, we recommend that you look through the contract/grant agreement and look for references to 2 CFR 200 or a CFDA number, which is a 5 digit number in the form of xx.xxx.
If you do need to obtain a single audit, Wipfli can help. Click here to learn about our audit services.
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