The Uniform Guidance requires testing federal award transactions against applicable statutes, regulations, and award terms. A single audit combines financial statement work with compliance work on selected major federal programs under Generally Accepted Government Auditing Standards (GAGAS).
Under 2 CFR 200.501, a covered nonfederal entity reaching the applicable federal expenditure threshold must obtain a single audit or an eligible program-specific audit. Covered entities include state, local, and tribal governments, institutions of higher education, and nonprofit organizations.
- Federal Audit Clearinghouse practice applies $750,000 or more for fiscal years starting before October 1, 2024, and $1,000,000 or more for fiscal years starting on or after that date.
- The relevant measurement is federal awards expended during the fiscal year, rather than cash received or total award authorization.
- Award-level administrative and cost requirements require separate attention to agency implementation, award dates, amendments, and applicable terms.
- Expenditures below the threshold generally exempt the entity from this audit requirement, while records remain available for federal review and other applicable audit requirements remain relevant.
Common mistakes
- Wrong population. Treating a $1,200,000 award authorization as current-year expenditure bypasses the activity needed to apply the audit threshold.
- Size overrides risk. Selecting Alder’s $1,400,000 housing program solely because it is Type A ignores the supported low-risk assessment and completed coverage calculation.
- Wrong award year. Combining January through December, Year 3, mixes parts of Marlow’s second and third award years.
Bottom line
- Covered entities generally require a single or eligible program-specific audit at $750,000 of federal expenditures for fiscal years starting before October 1, 2024, or $1,000,000 for fiscal years starting on or after that date.
- Federal expenditure measurement includes applicable recipient, subrecipient, loan, and noncash assistance activity.
- Required clusters, program size, program risk, auditee risk, and coverage are separate selection decisions.
- Major-program coverage is at least 40 percent, or 20 percent for a qualifying low-risk auditee, after including required programs.
Exam shortcut
The candidate marks the entity’s fiscal year and the award’s performance period separately before comparing dates or amounts. The candidate underlines the percentage base in an award excerpt. “Annual ceiling,” “total funding,” and “actual spending” produce different limits. Beside each document, the candidate writes the attribute it supports: payment, receipt, program benefit, eligibility, allocation, or timing.
The full lesson (about 7,822 words, 52 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- III.E6
Browse all free CPA AUD lessons or jump into free CPA AUD practice questions.