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Grant money comes with a rulebook

Uniform Guidance compliance, single-audit readiness and controls that hold up when a funder or auditor asks.

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Stewardship is a promise to the future.

Federal dollars change the job

A nonprofit that accepts a federal award, directly or through a state or county, agrees to more than the program budget. It agrees to keep written procurement procedures, document how staff time is charged, track equipment, monitor any subrecipients and maintain internal controls that a single auditor will later test. Most finance teams in this position are two or three people who also run payroll, board reporting and the annual audit.

The 2024 revision of the Uniform Guidance raised the single-audit threshold to $1,000,000 for fiscal years beginning on or after 1 October 2024. Some organizations dropped out of single-audit scope. Others are crossing the new line for the first time, often because one new award pushes federal spending past it in a single year. A single audit tests compliance with award terms as well as the financial statements, and the evidence it asks for has to exist before the auditor arrives.

Foundation funders ask their own questions: how restricted gifts are tracked, who approves a budget reallocation, whether the board sees results grant by grant. The answers are stronger when they come from the ledger rather than from a policy binder.

Four places grant compliance strains

  • Personnel charges rest on estimates

    Salaries are usually the largest charge to a federal award. When allocations follow budget percentages that nobody reconciles to actual work, the charge is hard to defend.

  • Subawards get filed as contracts

    Paying a partner organization to deliver part of a federal program can make you a pass-through entity, with duties to assess risk, issue compliant subawards and monitor. Many such agreements are written as vendor contracts.

  • Purchases happen informally

    A van, a software subscription or a consultant bought without written procedures, documented competition or a conflict check is a familiar single-audit finding.

  • The rules themselves may move

    OMB proposed a rewrite of 2 CFR 200 in May 2026. It is not final, but policies written now should be easy to revise if it is.

The rules that set the test

Status as of November 2026. Rules change; we date every statement we make about them.

Rule or standardWhat it asksStatus
Uniform Guidance, 2 CFR 200 (2024 revision)Government-wide terms for federal awards, covering internal controls, procurement, conflicts of interest, cost allowability, personnel cost documentation, equipment and subrecipient monitoring.Effective 1 October 2024. Equipment threshold $10,000; de minimis indirect cost rate 15%. Each award's terms set which version governs it.
Single audit, 2 CFR 200 Subpart FAn audit of the financial statements and of compliance for major federal programs, with the reporting package filed with the Federal Audit Clearinghouse.Required at $1,000,000 of federal expenditures for fiscal years beginning on or after 1 October 2024, and at $750,000 for earlier years.
Internal control over federal awards, 2 CFR 200.303Recipients must maintain effective internal control over each federal award, in line with the GAO Green Book or the COSO internal control framework.In effect. Single auditors test these controls for every major program.
OMB proposed rewrite of 2 CFR 200A proposed overhaul of federal grant rules, published 29 May 2026, including wider termination for convenience and a binding regulation in place of guidance.Proposed, not final. Comments closed 13 July 2026, and a continuing resolution bars finalization through 11 December 2026.

Start with the records auditors read

  • Grant & Uniform Guidance Compliance

    Written 2 CFR 200 policies, time-and-effort design, subrecipient monitoring and a mock single audit before the real one.

  • Full-Ledger Analytics

    Every grant-coded transaction scanned for costs outside the period of performance, unallowable items and payroll charges that do not match recorded time.

  • Controls Health Check

    A fixed-scope review of cash, payables and payroll controls, the same controls a single auditor will walk through.

  • Code of Conduct & Speak-Up Programs

    A conflict-of-interest process and a reporting channel staff will use, both of which funders and auditors ask about.

  • Integrity Center

    A public page that shows donors and funders your policies, governance contacts and the date of your last review.

  • Training Programs

    Sessions for board members and program directors on reading grant financials, built on your own budgets and awards.

The single audit wants evidence

Your financial statement auditor already asks whether the numbers are fairly presented. A single auditor adds a second question for each major program: did you follow the award's terms? That means costs that are allowable, incurred inside the period of performance, bought under written procurement procedures and charged to the award on a basis you can document. The auditor selects samples. The support for each one has to be on file already, because it cannot be recreated convincingly a year later.

If you are unsure whether you are in scope this year, the Single Audit Threshold Checker gives a general reading in a few minutes. Your auditor makes the determination.

What we test first

  1. Personnel charges. We compare the payroll allocated to each award with timesheets or activity records, pay period by pay period.
  2. Period of performance. We scan every grant-coded transaction for costs dated before the award began or after it ended.
  3. Unallowable costs. Entertainment, alcohol, fines and lobbying costs coded to a federal class or project are flagged for review.
  4. Procurement and conflicts. Purchases above your thresholds are matched to quotes, bids, conflict disclosures and an exclusion check in SAM.gov.
  5. Subawards. Agreements with partner organizations are classified as subawards or contracts, and each subaward is checked for required terms and monitoring.

Policies should describe real work

Written policies are a requirement of 2 CFR 200, but a policy that describes a process nobody follows becomes its own finding. We write procurement, conflict-of-interest, cost allowability, time-and-effort, equipment and subrecipient monitoring policies around how your team actually works, then train the people who will follow them. The single audit readiness checklist lists the documents auditors usually request first, and our Grant & Uniform Guidance Compliance work produces them.

As of November 2026 the OMB proposal to rewrite 2 CFR 200 is not final. We write to the current text and note the sections the proposal would change, so your policies stay current either way.

For a worked example, read the illustrative scenario The first single audit, which follows a community health nonprofit from its first projection above $1,000,000 to a rehearsed audit.

What people ask before hiring us

Do you perform single audits?

No. Finance Ethics does not perform audits or any attest work. We prepare your organization for the single audit, work alongside the auditor you select, and can run a mock audit so the first real one holds fewer surprises.

Our federal funding comes through the state. Does it count toward the threshold?

Generally yes. Federal funds received as a subaward through a state agency, county or other pass-through entity count as federal expenditures. Payments under a contract for goods or services usually do not. Your award documents should show an assistance listing number. Our threshold checker gives a general reading; your auditor makes the determination.

Should we wait for the new Uniform Guidance before rewriting policies?

We would not wait. As of November 2026 the May 2026 proposal is not final, and your current awards are governed by the terms written into them. We write policies to the current text and mark the sections the proposal would change, so a later revision is an edit rather than a rewrite.

We spend well under $1M in federal funds. Does any of this apply?

Yes. Written procurement standards, personnel cost documentation, equipment records and internal controls apply to every federal award, whatever its size. The threshold only decides whether a single audit is required.

Related work and reading

Services

  • Grant & Uniform Guidance Compliance

    An eight-to-twelve-week project that writes the policies 2 CFR 200 requires, fixes time-and-effort and subrecipient processes, and runs a mock single audit before the real one.

  • Full-Ledger Analytics

    A two-to-four-week diagnostic that runs a library of explainable tests and outlier models over every transaction in the period, then reports only the flags an analyst has reviewed.

Articles and scenarios

Tell us what you are seeing

A first conversation is a scoping call: what worries you, what you need to show, and to whom. You leave it with a view on where to start, whether or not you hire us.

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