For nonprofit organizations in Virginia and Washington DC that expend $750,000 or more in federal awards in a year, the Single Audit is a critical compliance milestone. As we move through 2026, expectations for Single Audit documentation and compliance continue to rise. Funders want stronger documentation, cleaner Schedules of Expenditures of Federal Awards (SEFA), and clearer time-and-effort support . The 2024 Uniform Guidance, which became fully effective for fiscal years beginning after October 1, 2025, introduced several changes affecting Single Audits. These include modifications to major program determination thresholds and updated procurement standards. For the 2026 audit season, auditors face stricter reporting expectations when they cannot quantify questioned costs, leading to potentially more findings and required corrective actions . Single Audit extensions, while available, are now generally granted only when tied to meaningful operational disruptions, not simply administrative delays. Practical steps for preparing for a Single Audit include creating an organized file for each grant, verifying that payroll allocations are properly documented, refreshing procurement and reimbursement procedures, and considering a “mini-checkup” before audit season . Grant dollars come with strings—an organization’s job is not to get tangled in them . The SEFA must be accurate and complete, with each federal award identified by CFDA number (now known as Assistance Listings number), amount expended, and pass-through entity information. Nonprofits receiving federal funds should also be aware of changes to procurement thresholds under the Uniform Guidance. The micro-purchase threshold increased from 10,000to10,000to50,000 effective late 2025, and the simplified acquisition threshold increased from 250,000to250,000to500,000. Organizations must update their procurement policies accordingly and ensure compliance with the new limits. At Nova Tax & Accounting Services, our Audit & Review and Assurance and Compliance for Nonprofits services include Single Audit support, helping organizations prepare accurate SEFAs and maintain the documentation required by federal award terms.
For many nonprofits—healthcare systems, colleges and universities, cultural institutions, and community organizations—accessing the bond market through public conduit debt is a common financing strategy. However, a trip to the bond market can come with an accounting surprise: some nonprofits that issue certain public debt can find themselves swept into public-entity reporting rules under U.S. GAAP, triggering earlier adoption dates, broader disclosures, and added compliance costs . According to testimony at a March 2026 meeting of the Financial Accounting Standards Board’s Not-for-Profit Advisory Committee, “there is some confusion out there” about this distinction . Nonprofits are generally excluded from the definition of a public business entity under U.S. GAAP. However, depending on whether their securities are available to the general public or trade publicly, some nonprofits can still be treated as public entities for certain reporting purposes . For organizations issuing debt for the first time, “the research component is a bit overwhelmingly administrative” . Auditors report that they still spend substantial time walking clients through these distinctions. “There is confusion because of the closeness in public business entity and public entity,” noted Dawn Stark, a partner at Plante Moran . Nonprofits with conduit debt can struggle to determine which effective date applies when standards use different terminology, leaving some organizations on faster adoption timelines than otherwise similar peers . For users of financial statements, the issue is less about whether adoption comes sooner or later than whether it happens consistently. Robert Dobbins, managing director at S&P Global Ratings, emphasized that comparability suffers when similar issuers adopt standards on different schedules: “The more often everyone is on the same timeframe in which they’re adopting the changes, the better” . Some committee members have urged FASB to simplify the framework, suggesting perhaps all nonprofits should be scoped out of the definition regardless of what type of debt they issue . For nonprofits considering bond financing, understanding these potential accounting consequences is essential. At Nova Tax & Accounting Services, our Audit & Review team can help healthcare, educational, and cultural organizations navigate these complex GAAP distinctions and ensure proper financial statement presentation.
Internal controls are the policies and procedures that safeguard an organization’s assets, ensure the reliability of financial reporting, and promote compliance with laws and regulations. For nonprofits, where public trust is the currency of operation, a sufficiently designed and effectively operating system of internal controls is essential . Auditors, funders, and boards are placing greater emphasis on how nonprofits safeguard their finances, and even small teams must show clear review processes and documented checks and balances . The Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides the most widely accepted framework for internal control, which includes five integrated components: control environment, risk assessment, control activities, information and communication, and monitoring activities . For nonprofits, key control activities typically include segregation of duties (authorization, recording, and custody of assets should be separated), physical controls over assets (locked cash drawers, restricted access to check stock), and independent reconciliations (bank statements reviewed by someone not handling cash). Perhaps the most common recommendation for understaffed nonprofits is to implement compensating controls when full segregation is impossible. For example, if one person handles both cash receipts and bank reconciliations, a board member or executive director should review the reconciled statements monthly. Documentation is critical: all controls should be put in writing, not just “understood,” and evidence of reviews should be retained . Think of internal controls like seatbelts—you barely notice them until they save you . The 2026 Nonprofit Internal Control course offered by the New Jersey Society of CPAs emphasizes that the importance of internal controls applies regardless of a nonprofit entity’s nature, size, or complexity . Information technology general and application controls are also critical, even in less-complex IT environments . At Nova Tax & Accounting Services, our Assurance and Compliance for Nonprofits team can help you document your internal control environment, identify gaps, and implement practical solutions that protect your organization and satisfy auditor expectations.