Understanding the Single Audit Threshold
For organizations that receive federal funding, the Single Audit requirement represents one of the most significant compliance obligations they face. In 2024, the Office of Management and Budget (OMB) raised the Single Audit threshold from $750,000 to $1,000,000, effective for fiscal years beginning on or after October 1, 2024 . This change brought relief to many smaller organizations but also created confusion about which entities must undergo the rigorous audit process.
What Is the Single Audit Threshold?
The Single Audit threshold determines whether a non-federal entity—including nonprofit organizations, state and local governments, and other federal award recipients—must obtain a Single Audit for its fiscal year. Under 2 CFR 200.501, any entity that expends $1,000,000 or more in federal awards during its fiscal year must have either a Single Audit or, in limited single-program situations, a program-specific audit conducted for that year .
The threshold is based on federal awards expended during the fiscal year, not on awards received. This distinction is important because organizations may receive awards in one year but expend them over multiple years. The threshold applies to the total amount of federal funds actually spent, not the total amount awarded or drawn down.
Who Is Affected by the Single Audit Threshold?
The Single Audit requirement applies to all non-federal entities that expend federal awards, including:
Nonprofit organizations (including 501(c)(3) organizations, foundations, and charities)
State and local governments
Public housing authorities
Colleges and universities
Healthcare providers
Tribal organizations
For-profit entities (only when explicitly required by the award or agency)
For most for-profit businesses, the Single Audit requirement does not automatically apply. However, some federal awards or agencies may specifically require a Single Audit or program-specific audit as a condition of the award.
What a Single Audit Includes
A Single Audit is more comprehensive than a standard financial statement audit. It combines:
A Financial Statement Audit: Examines the accuracy of your financial statements and internal controls over financial reporting.
A Compliance Audit: Assesses whether your organization has followed the specific rules, regulations, and terms of each federal award or program under the Uniform Guidance.
This means the audit is not just about the numbers, but also about how federal funds were managed, documented, and reported. The audit includes testing of internal controls over compliance and compliance testing for major federal programs .
2026 Single Audit Updates
OMB published a proposed rewrite of 2 CFR Part 200, the Uniform Guidance, in the Federal Register on May 29, 2026 . The proposal does not lower the Single Audit threshold or reverse the 15% de minimis indirect cost rate. Both remain in effect at $1,000,000 of federal awards expended and 15% of modified total direct costs .
The proposal instead targets broader grant administration policy, including pre-issuance review of selected discretionary awards and expanded agency termination authority. The audit framework in Subpart F is being refined, not rebuilt .
If finalized, the proposed rule contemplates an effective date as early as October 1, 2026, which would align with the start of the federal fiscal year .
How to Determine If You Need a Single Audit
To determine whether your organization needs a Single Audit:
Calculate total federal awards expended during your fiscal year. This includes all federal grants, contracts, cooperative agreements, and other federal assistance.
**Compare the total to the $1,000,000 threshold.** If the total equals or exceeds $1,000,000, a Single Audit is required.
If you are below the threshold, no Single Audit is required, but you may still need to comply with other audit requirements from state or local governments, grantors, or funders.
For HUD multifamily entities, be aware that the REAC FASS-MF system still validates against the old $750,000 threshold, creating a compliance gap . Entities expending between $750,000 and $999,999 must navigate this system issue carefully.
How We Can Help
At Nova Tax & Accounting Services , we provide Single Audit (Uniform Guidance) services for nonprofits, government entities, and other federal award recipients. Our team helps you prepare for a smooth Single Audit experience, organize your grant documentation, and address any findings or questioned costs.
We also assist with pre-audit assessments to identify and address potential issues before the audit begins. Schedule your free consultation today to discuss your Single Audit needs.
