Single audit readiness checklist

June's budget crosses the line

The finance committee of a workforce training nonprofit is reviewing next year's budget. A new subaward from the state labor department, funded by a federal program, adds $410,000. With two existing federal grants, projected federal spending for the year comes to about $1.25 million. The board treasurer asks whether that means a single audit. It does, and the audit will test records from a fiscal year that starts in three weeks.

This is an illustrative example. The lesson in it is general: readiness for a single audit is built during the year being audited, not after it ends.

The threshold counts dollars spent

Under 2 CFR 200.501, a non-federal entity that expends $1,000,000 or more in federal awards during its fiscal year must have a single audit, or in narrow cases a program-specific audit. The $1,000,000 threshold applies to fiscal years beginning on or after 1 October 2024. Before that it was $750,000. An entity that expends less is exempt from federal audit requirements for that year, though its records must still be available for review.

Three details catch first-time auditees:

• Expenditure, not award size. The test is what you spend in the fiscal year. A three-year award of $1.5 million spent evenly does not cross the line on its own.
• Pass-through money counts. Federal funds that reach you through a state agency or another nonprofit count the same as a direct federal grant. Loans and loan guarantees can count too, depending on the program.
• The program-specific option is narrow. It is open only when you spend under a single federal program (excluding research and development) whose rules do not require a financial statement audit, or for research awards from one agency with that agency's advance approval.

You can test your own figures against the rule with the single audit threshold checker.

The clock after year end

2 CFR 200.512 sets the due date. The reporting package and the data collection form go to the Federal Audit Clearinghouse within 30 calendar days of receiving the auditor's report, or nine months after the end of the fiscal year, whichever is earlier. For a calendar-year organization, the outside date is 30 September. Book the auditor early, because those nine months have to hold fieldwork, the report and your responses to any findings.

Findings follow missing paper

A single audit finding usually means the auditor could not see evidence that a requirement was met, whether or not the money was well spent. A practitioner summary from GRF CPAs & Advisors lists the areas where findings recur, and each one maps to a compliance requirement auditors test:

• Allowable costs. Payroll charged to grants without support for how time was split, and costs with no documented approval.
• Cash management. Drawdowns that run ahead of spending, or that are never reconciled to the ledger.
• Eligibility. Participant files missing the documents that show the person qualified.
• Equipment. No physical inventory in the past two years, and no record of which award paid for an asset.
• Period of performance. Costs dated before the award began, or posted after it ended.
• Procurement, suspension and debarment. No quotes or price analysis on file, and no SAM.gov check before contracting.
• Reporting. Federal financial reports filed late, or that do not agree to the ledger.
• Subrecipient monitoring. No risk assessment, no review of subrecipient audits, no follow-up on corrective action.

Repeat findings deserve the most attention. In an April 2024 review of Federal Audit Clearinghouse data, GAO found that $1.17 trillion of the $6.97 trillion in direct federal award expenditures reported from 2017 through 2021 was associated with findings that were both severe and repeated across years. Fixing a finding in its first year keeps it out of that category.

Subrecipients are part of your audit

If you pass federal money to other organizations, 2 CFR 200.332 makes you answerable for how you oversee them. A pass-through entity must:

• Identify each subaward as a subaward and include the required data, such as the subrecipient's unique entity identifier, the federal award identification number, the Assistance Listing number, the amounts and dates, and the indirect cost rate.
• Verify that the subrecipient is not excluded from federal awards, including a check in SAM.gov.
• Evaluate each subrecipient's risk of fraud and noncompliance, considering its experience with similar subawards, prior audit results, new staff or systems, and any federal monitoring.
• Monitor performance and finances, review the reports it receives, and make sure significant problems are corrected.
• Issue management decisions on audit findings that relate to its award, and verify that each subrecipient is audited as the rules require.

Start with a determination memo for each agreement that records why it is a subaward and not a contract. Auditors ask for it, and the answer decides which rules apply to everything after it.

Every item leaves a document

Work through the list in order, and keep each document where an auditor can find it.

Before the fiscal year starts

• List every federal award with its Assistance Listing number, award identifier, pass-through entity, period and budget.
• Forecast federal expenditures by award against the $1,000,000 threshold.
• Adopt the written policies the Uniform Guidance expects: procurement, conflicts of interest, cost allowability, time and effort, travel, equipment, cash management and subrecipient monitoring.
• Set up the chart of accounts so every cost carries an award code and a period.
• Engage an auditor with single audit experience and agree the timetable in writing.

Every month

• Support payroll charged to awards with records of the work actually performed, reviewed by a supervisor.
• Keep a procurement file for each purchase: quotes or price analysis, the reason for the selection, and a dated SAM.gov exclusion check.
• Reconcile drawdowns to recorded expenditures.
• Confirm that every cost charged falls inside the award period.
• Record new equipment with its funding source and cost. Under the 2024 revision, equipment means items costing $10,000 or more per unit, or less if your capitalization threshold is lower.
• File federal reports on time, tied to the ledger and reviewed before submission.

For each subrecipient

• Keep a determination memo, a risk assessment, a subaward with the required data, a monitoring log, and evidence that its audit was received and reviewed.

At year end

• Prepare the schedule of expenditures of federal awards from the ledger and reconcile it, award by award, to the general ledger.
• Update the status of every prior-year finding and its corrective action.
• Assemble the documents the auditor has requested before fieldwork begins.
• Run a mock test: pick a handful of transactions from each large program and trace each one from the drawdown to the invoice, the approval, the payroll record and the report.

OMB's rewrite is still a proposal

On 29 May 2026, OMB published a proposed rule that would turn 2 CFR 200 into a binding regulation for federal financial assistance. Comments closed on 13 July 2026. Among the proposed changes:

• Awards could be terminated when that is in the interest of the federal agency or pass-through entity, with no minimum notice period and without the current objection and appeal rights for discretionary terminations.
• Fixed amount awards and subawards would be barred unless a statute authorizes them.
• Pass-through entities would take on new duties toward subrecipients, and payments to affiliates would have to be treated as subawards or contracts.
• Future amendments would take effect government-wide on a single date.

Section 157 of the Continuing Appropriations Act, 2027, signed on 2 September 2026, provides that the proposed rule, or one substantially similar, shall not be issued or finalized through 11 December 2026. As of November 2026 the rule is not final. Keep following the version of the Uniform Guidance and the terms that apply to each award, and do not build processes around the proposal yet. It is reasonable now to read your award terms for termination exposure and to keep the documentation that would matter under either version.

Where to start

Begin with the award list and the expenditure forecast, because every other item on the checklist depends on knowing which awards are in scope. If the policies are missing or out of date, our grant and Uniform Guidance compliance work writes them around how your team already operates and runs a mock single audit before the real one. For the wider set of policies a finance office needs, see financial policies and procedures manual: a table of contents.