Hi! I am happy to share some high level information about the Single Audit and what to expect. What we typically consider a “regular” or “normal” audit is a financial statement audit performed under GAAS (Generally Accepted Auditing Standards). The objective of a financial statement audit for the auditor to express an opinion as to whether the financial statement are prepared, in all material respects, with generally accepted accounting principles (US GAAP) or another basis of accounting as appropriate. There are various reasons why an organization would engage an independent CPA to perform a financial statement audit, including a requirement imposed by their state. (You can visit the National Council of Nonprofits website to see your State’s requirement.)
By contrast, a single audit applies an organization expends $750,000 or more of federal financial funds in their fiscal year (Note – Refer to details of each grant agreement to understand whether it counts towards this total and is subject to single audit.) This audit is addition to a financial statement audit and tests compliance with requirements of the federal awards. Depending on the number of different federal awards and dollar amount of expenditures, the auditor may or may not test compliance with all grant agreements.
The most important thing to do in preparation for a single audit is to understand which expenditures count toward the $750,000 threshold. It may sound easy, but federal funds are commonly received from state or city government sources or passed through from other nonprofits, making it tricky. Be aware of all compliance requirements and ensure compliance at all times. At year end, prepare a SEFA (Schedule of Expenditures of Federal Awards), listing all federal sources and total expenditures during the fiscal year for each.