By Claudia Valarezo Guerrero, MAccy, Senior Accountant at Blue & Co.
As organizations navigate evolving financial regulations, staying informed about changes is crucial for compliance and operational efficiency. A Single Audit, also known as the Uniform Guidance audit, is a comprehensive review of an organization’s federal awards expenditures. It serves as a mechanism to assure the Federal Government that a non-federal entity has adequate internal controls and complies with program requirements. Since 2015, the threshold triggering the requirement for a Single Audit has been the expenditure of $750,000 or more of federal assistance within the non-federal entity’s fiscal year.
The concept of the Single Audit was developed in the 1980s as a remedy to the inefficient process of conducting financial audits of federal grant recipients on a grant-by-grant basis. Over the years, the Single Audit has undergone several legislative and administrative developments, including the Single Audit Act Amendments of 1996, the National Single Audit Sampling Project in 2007, the Improper Payments Initiative in 2009, and the consolidation of all Single Audit circulars with Uniform Guidance issued in 2013.
This year will bring another significant change as the threshold triggering the requirement for a Single Audit increases from $750,000 to $1,000,000. This evolution of the Single Audit is a testament to the continuous efforts to improve financial management and oversight in organizations.
This change is part of the updated regulations for 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), now termed OMB’s Guidance for Federal Financial Assistance. The Office of Management and Budget (OMB) revised and updated the Uniform Guidance to incorporate recent federal policy priorities related to federal financial assistance and to reduce federal agency and recipient burden.
The revisions aim to improve federal financial assistance management, transparency, and oversight through more accessible and readily understandable guidance. The change will be applicable for all awards issued on or after October 1, 2024
The increase in the Single Audit threshold is not just a change, but a potential boon for entities that receive federal financial assistance. This change will reduce the number of Single Audits required each year, offering more flexibility in programmatic and budgetary decisions. It will also lighten the audit burden for entities with federal funding below the new threshold, allowing for increased operational flexibility.
The changes in the Single Audit threshold and other related regulations in 2024 are a call to action for entities that receive federal financial assistance. These changes aim to reduce federal agency and recipient burden and improve federal financial assistance management, transparency, and oversight through more accessible and readily comprehensible guidance. It is imperative that entities receiving federal awards familiarize themselves with these changes and prepare accordingly to ensure compliance. Early preparation is key to avoiding any potential disruptions in federal funding and ensuring a smooth transition.
If you have questions regarding Single Audits for your organization, please contact your local Blue & Co. advisor for assistance.
