Performing Single Audits of Federal Awards Under Uniform Guidance

A Single Audit is a federal-award audit framework for nonfederal entities that expend federal awards above the applicable threshold. It combines a financial statement audit with compliance testing over major federal programs.

For current-period exam study, treat the threshold as period-sensitive. For fiscal years beginning on or after October 1, 2024, the Single Audit threshold is generally $1,000,000 of federal awards expended. For earlier fiscal years, the prior $750,000 threshold may still be relevant.

    flowchart TD
	    A["Federal awards expended during fiscal year"] --> B{"Meets applicable Single Audit threshold?"}
	    B -- "No" --> C["No Single Audit required under Subpart F, but records remain subject to review"]
	    B -- "Yes" --> D["Prepare financial statements and SEFA"]
	    D --> E["Financial statement audit under GAAS and Yellow Book"]
	    D --> F["Major-program compliance audit under Uniform Guidance"]
	    E --> G["Financial statement opinion and Yellow Book report"]
	    F --> H["Opinion on compliance for major programs"]
	    H --> I["Schedule of findings and questioned costs"]

Single Audit Purpose

Single Audits are designed to give federal agencies, pass-through entities, and other users a coordinated audit over financial statements and federal-award compliance. Instead of separate audits for every award, the auditor uses a risk-based approach to select major programs for compliance testing.

The Single Audit does not audit every transaction in every federal program. It focuses detailed compliance testing on major programs.

Threshold and Applicability

The threshold is based on federal awards expended during the fiscal year, not federal awards received, budgeted, or promised.

The entity may be a recipient, subrecipient, and contractor at the same time. Federal awards expended as a recipient or subrecipient count for Single Audit purposes. Payments for ordinary goods or services as a contractor generally do not count as federal awards expended.

Major Programs

The auditor does not test all programs equally. Uniform Guidance uses a risk-based approach to identify major programs.

Major-program selection considers:

• Size of the program.
• Type A and Type B program classification.
• Prior audit findings.
• Program complexity.
• Newness of the program.
• Oversight by federal agencies or pass-through entities.
• Whether the auditee qualifies as low risk.

Once a program is selected as major, the auditor tests compliance requirements that could have a direct and material effect on that program.

Common Compliance Requirements

The auditor uses the applicable program rules and compliance requirements. Common categories include:

The exam frequently uses allowable costs, eligibility, procurement, reporting, period of performance, and subrecipient monitoring fact patterns.

SEFA and Reporting Package

The Schedule of Expenditures of Federal Awards, or SEFA, lists federal awards expended by program and other required identifying information. The auditor reports on whether the SEFA is fairly stated in relation to the financial statements as a whole.

The auditee, not the auditor, is responsible for preparing the corrective action plan.

Questioned Costs and Findings

Questioned costs arise when the auditor identifies costs that may be unallowable, inadequately supported, or otherwise inconsistent with award requirements.

Not every finding has a known dollar amount. When questioned costs are unknown or not reported, the auditor explains the issue as required by the reporting framework.

Exam Traps

• The threshold is based on awards expended, not awards received.
• The threshold is period-sensitive: $1,000,000 for fiscal years beginning on or after October 1, 2024; $750,000 may apply to earlier periods.
• The SEFA is not the same as the financial statements.
• Major-program testing is risk-based; not every federal program receives full compliance testing.
• Single Audit includes both financial statement audit work and major-program compliance work.
• The corrective action plan is management’s responsibility.
• Contractors are not automatically treated as subrecipients.

Quick Review

Use this sequence for Single Audit questions:

1. Determine whether federal awards were expended above the applicable threshold.
2. Identify whether the entity is a recipient, subrecipient, or contractor.
3. Recognize the financial statement audit plus major-program compliance audit structure.
4. Identify the SEFA and in-relation-to reporting.
5. Apply risk-based major-program selection.
6. Classify findings, questioned costs, and corrective-action responsibilities.

Review Questions