Federal funding can help a nonprofit expand services, hire staff, and serve more people across Miami-Dade, Broward, Palm Beach, Alameda, Contra Costa, Marin, and San Francisco counties. It can also create a significant compliance obligation.
When a nonprofit spends enough in federal awards during its fiscal year, it may need a Single Audit under the federal Uniform Guidance. The audit examines not only the organization’s financial statements, but also its compliance with requirements tied to major federal programs.
For executive directors and development staff, the most important point is this: the threshold is based on federal awards expended, not the amount awarded, received, or budgeted. And because federal rules have recently changed, organizations that have long used the $750,000 benchmark should confirm which threshold applies to their fiscal year.
The $750,000 threshold—and the current rule
Historically, a nonprofit generally needed a Single Audit when it expended $750,000 or more in federal awards during its fiscal year. That threshold applied to many organizations receiving federal grants directly or through pass-through entities such as state, county, or local agencies.
OMB’s 2024 revisions to the Uniform Guidance increased the threshold to $1 million for fiscal years beginning on or after October 1, 2024. The $750,000 threshold may still apply to an earlier fiscal year, depending on the organization’s fiscal-year start date and the rules governing that audit period.
This transition creates a practical compliance risk. A nonprofit may assume that crossing $750,000 automatically triggers a Single Audit, while another may assume the old threshold no longer matters. Both assumptions can be wrong without checking the applicable fiscal-year rules.
Before making a determination, document:
- Your fiscal-year beginning and ending dates
- The federal awards expended during that fiscal year
- Whether the awards were received directly or passed through another organization
- The applicable Uniform Guidance threshold for that fiscal year
- Any award-specific audit or reporting requirements
A grant’s funding source may not be obvious from the name of the program. Review the award agreement, Assistance Listings information, pass-through terms, and payment documentation. Your organization’s readiness profile can help track eligibility and compliance gaps, but management and its auditor remain responsible for the formal determination.
What counts as federal awards expended?
The calculation is not simply a list of federal checks deposited into the bank account. Federal awards are generally considered expended when the organization has incurred qualifying costs or otherwise used the award during the fiscal year.
Depending on the award structure, expenditures can include:
- Salaries and benefits charged to a federal program
- Supplies, equipment, and contracted services
- Program costs paid through a subaward
- Certain loan, loan guarantee, or other financing activity
- Donated property or other transactions treated as federal expenditures under the award terms
Timing matters. A nonprofit that receives a large grant near year-end may not have expended the full amount. Conversely, an organization may have significant federal expenditures even if reimbursement has not yet arrived.
Pass-through funding also deserves close attention. A nonprofit in Broward County may receive funding through a state or county agency, while a nonprofit in San Francisco County may receive a federal program through another intermediary. The award may feel local, but the underlying funds can still count toward the Single Audit threshold.
By contrast, support from private or community funders—including The Miami Foundation, Knight Foundation, Health Foundation of South Florida, Silicon Valley Community Foundation, San Francisco Foundation, Hellman Foundation, Walter & Elise Haas Fund, or Marin Community Foundation—does not become a federal award simply because it supports a similar program. Read the grant agreement carefully, especially when a private funder is administering or regranting federal dollars.
What the Single Audit covers
A Single Audit usually includes two connected components:
- A financial statement audit, which evaluates whether the organization’s financial statements are presented fairly under the applicable accounting framework.
- A compliance audit, which tests whether the nonprofit followed requirements for selected major federal programs.
The compliance portion may examine requirements such as:
- Allowable and unallowable costs
- Activities permitted under the award
- Matching or cost-sharing requirements
- Eligibility of participants or beneficiaries
- Reporting and financial documentation
- Procurement and suspension or debarment rules
- Subrecipient monitoring
- Period of performance
- Equipment and inventory controls
- Internal controls over compliance
The auditor does not test every federal program in the same way. Under the Single Audit framework, the auditor assesses risks and selects major programs for testing. A small award can still create problems if its controls are weak or if the organization has a history of findings.
That is why a clean general ledger is not enough. The nonprofit must be able to connect transactions to the correct federal program, show why costs were allowable, and demonstrate that staff followed written procedures.
Five preparation steps for nonprofit leaders
1. Build a federal-award inventory
Create one list of every federal award active during the fiscal year. Include the federal agency, Assistance Listings number when available, pass-through entity, award number, period of performance, total expenditures, and required reports.
Do not rely on the development calendar alone. Ask finance, program, and grants staff to compare award agreements with the accounting system. A grant search and filtering workflow can help staff separate federal opportunities from foundation and local funding before an award is accepted, but the finance team should maintain the official expenditure record.
2. Reconcile the SEFA throughout the year
The Schedule of Expenditures of Federal Awards, or SEFA, is central to the Single Audit. It lists federal programs and the amount expended for each during the fiscal year.
Treat the SEFA as a year-round workpaper rather than a schedule assembled after year-end. Reconcile it monthly or quarterly to the general ledger, investigate differences, and preserve support for allocation decisions. If an award has indirect costs, subawards, or multiple program components, document how each amount was calculated.
3. Review internal controls before the auditor arrives
Ask whether someone independent reviews payroll allocations, invoices, procurement files, drawdowns, and financial reports. Check whether staff can explain approval thresholds and whether backup documentation is retained consistently.
Common weaknesses include:
- Costs charged to the wrong grant
- Missing timesheets or inadequate effort documentation
- Late financial or program reports
- Unapproved budget changes
- Weak review of vendor eligibility
- Incomplete monitoring of subrecipients
- Policies that exist on paper but are not followed
A short internal review can identify correctable issues before they become audit findings.
4. Select and communicate with the auditor early
The organization is responsible for procuring audit services in accordance with applicable requirements. Begin the process well before year-end, particularly if your nonprofit has a first-time Single Audit, multiple federal programs, or complex pass-through arrangements.
Give the auditor access to award agreements, prior audits, management letters, policies, board minutes, the general ledger, payroll records, procurement files, and the draft SEFA. Ask what information will be needed for major-program determination and compliance testing.
5. Track findings through resolution
An audit finding is not automatically evidence of fraud or intentional misuse. It may reflect a control deficiency, an unsupported cost, a reporting error, or noncompliance with an award condition. Still, findings require management attention.
For each finding, assign an owner, corrective action, target date, and method for verifying completion. The corrective-action plan should address the underlying process—not just the individual transaction that exposed the problem.
Deadlines and public reporting
The auditor’s reports and related documents generally must be submitted to the Federal Audit Clearinghouse no later than 30 days after the auditor delivers the audit report to the organization, or nine months after the end of the audit period, whichever comes first.
Confirm the current submission process and any agency-specific instructions. Late submissions can affect future funding decisions, especially when a pass-through agency is evaluating whether an organization has adequate financial management systems.
Use a centralized deadline calendar and reminder system for audit milestones, federal reports, board review, corrective-action deadlines, and grant renewals. The same discipline should apply to local funders. The Children’s Trust, for example, may impose its own program and financial reporting requirements that are separate from a federal Single Audit.
Questions to ask before accepting more federal funding
Before pursuing or accepting a new award, leadership should ask:
- Will projected expenditures push the organization over the applicable Single Audit threshold?
- Does the grant require an audit regardless of the threshold?
- Are indirect costs, matching funds, or subawards involved?
- Can the accounting system track the award separately?
- Who will approve expenditures and review reports?
- Is the organization prepared to monitor partners and subrecipients?
- Will the grant’s reporting schedule overlap with other major deadlines?
Federal funding should be evaluated as both a revenue opportunity and a systems commitment. A strong opportunity may not be a good fit if the organization lacks the staffing, controls, or documentation needed to administer it.
Conclusion: prepare before the threshold becomes a problem
The Single Audit is easier to manage when finance, programs, development, and the board treat compliance as an ongoing operating function. Track federal expenditures during the year, maintain a reliable SEFA, document internal controls, and confirm which threshold applies to your fiscal period.
For organizations serving South Florida or the Bay Area, this preparation is especially important when federal awards are blended with county contracts, foundation grants, and pass-through funding. Before applying for or accepting the next award, ask the compliance assistant about eligibility, reporting, and audit-readiness questions and build a documented plan for managing the funds.