The Complete Guide to the Single Audit Process
Originally published on November 17, 2025
For many nonprofits, a single audit represents a critical accountability milestone, one that ensures proper stewardship of federal funds while demonstrating your organization’s commitment to financial integrity. With federal threshold changes taking effect in late 2025 (increasing from $750,000 to $1,000,000), understanding this process has never been more important.
This guide breaks down what you need to know about single audits, from fundamental concepts to practical preparation steps, helping you turn this compliance requirement into an opportunity to strengthen your organization’s financial practices.
Understanding Single Audit Fundamentals
A single audit examines both your financial statements and your compliance with federal program requirements. Originating with the Single Audit Act of 1984 (amended in 1996), this consolidated approach replaced multiple program-specific audits, reducing administrative burden while maintaining strong accountability.
In April 2024, the Office of Management and Budget revised the Uniform Guidance, raising the single audit threshold to $1,000,000 for fiscal years beginning on or after Oct. 1, 2024. As we wind down 2025, many organizations are now implementing these changes, providing relief for many smaller organizations.
When determining whether your organization meets the single audit threshold, include all federal funds spent during the fiscal year, whether received directly from a federal agency or passed through another organization (such as a state or local government). Only funds actually expended during your fiscal year count toward this threshold, not amounts awarded but not spent.
For nonprofits receiving substantial federal support, single audits serve as verification that your financial statements give an accurate picture of your organization’s financial health, confirm compliance with regulations, evaluate internal control systems and ensure proper use of taxpayer funds.
Key Components of the Single Audit Process
A single audit consists of two primary parts: a financial statement audit and a compliance audit. The financial statement component evaluates whether your statements fairly present your financial position according to Generally Accepted Accounting Principles (GAAP).
Meanwhile, the compliance audit focuses specifically on your federal awards, determining whether your organization followed the rules governing each major program. The Schedule of Expenditures of Federal Awards (SEFA) forms the backbone of this process, listing all federal awards expended during your fiscal year, including Assistance Listing numbers (which indicate the originating federal agency and specific program) and total expenditures.
Auditors use a risk-based approach to determine which programs qualify as “major programs” requiring detailed testing. The 2024 updates to the Uniform Guidance, now applicable in late 2025, increase both the single audit applicability threshold and the Type A program threshold to $1 million for organizations with total federal expenditures of $34 million or less, potentially reducing testing requirements for many nonprofits.
Prepare for a Successful Single Audit
Effective preparation requires a year-round approach rather than last-minute scrambling. Start by establishing a clear timeline, working backward from your submission deadline (typically nine months after your fiscal year-end).
Select an auditor with specific nonprofit and single audit experience. Their familiarity with your funding sources and relevant requirements will make a significant difference in the process.
Documentation preparation represents the most time-consuming aspect. Gather and organize:
- All grant agreements and amendments
- A complete, accurate SEFA
- GAAP-compliant financial statements
- Internal control documentation
- Detailed records of program expenditures
- Time and effort reporting
- Procurement documentation
Most importantly, implement and document strong internal control systems throughout the year. These processes ensure accurate financial reporting, compliance with regulations, and protection of assets, all elements your auditors will evaluate closely.
Common Single Audit Findings and How to Avoid Them
Understanding frequent audit findings helps you take preventive measures. Top issues include:
- Inadequate internal controls, including insufficient segregation of duties and missing documentation. The updated 2024 Uniform Guidance specifically requires cybersecurity measures to protect sensitive information.
- Incomplete financial reporting, including SEFA errors and inadequate supporting documentation.
- Time and effort reporting problems, particularly inconsistent allocation across funding sources.
- Procurement deficiencies, such as failure to follow federal standards or inadequate documentation of vendor selection.
Address these potential problems by developing comprehensive written policies, implementing regular internal reviews, maintaining detailed records of all federal expenditures, and ensuring your procurement procedures align with federal requirements.
Single Audit Reporting and Submission
Once completed, your audit reporting package must be submitted to the Federal Audit Clearinghouse, now operated by the General Services Administration (GSA). Submission requires electronic filing through their portal, including webforms and PDF uploads.
If your audit identifies findings, develop a thorough Corrective Action Plan addressing each issue with specific remediation steps, responsible personnel identified, and implementation timelines.
Build Year-Round Readiness
The single audit process provides a valuable opportunity to strengthen your financial management systems and demonstrate proper stewardship of federal funds. By understanding the requirements and implementing strong internal controls, you can approach this process with confidence.
The changes from the 2024 Uniform Guidance revisions are now impacting many organizations, making it essential to stay informed about these updates for effective compliance planning. Remember that audit readiness is an ongoing commitment to excellence, not a last-minute effort.
At James Moore, we work with nonprofits to establish financial practices that support both compliance and mission advancement.
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