Does your nonprofit need a Single Audit? The answer comes down to a single number: $1,000,000.
If your organization expends (spends) $1 million or more in federal award funding during your fiscal year, you are generally required to undergo a Single Audit under the Uniform Guidance. If your total federal expenditures fall below that mark, you are not subject to the federal Single Audit requirement.
Let’s cut through the regulatory jargon and look at the practical rules governing federal grant compliance, when single audit is required, and what your executive team needs to do next.
The Short Answer: The $1 Million Threshold
Under the federal government’s Uniform Guidance framework, the threshold for a Single Audit is clearly defined.
- The Rule: If your nonprofit expends $1,000,000 or more in federal award funding during your fiscal year, you are generally required to undergo a Single Audit.
- The Exemption: If your total federal expenditures fall below $1,000,000, you are not subject to the federal Single Audit requirement (standard annual reporting still applies).
- Critical Distinction: The threshold is triggered strictly by federal grant dollars expended (spent) during your fiscal year—not by the total amount of grant funding awarded or cash received in your bank account.
Quick Assessment: Do You Need a Single Audit?
| If Your Organization… | Then Your Single Audit Status Is… |
| Spent less than $1,000,000 in federal funds | Exempt (Standard annual reporting still applies) |
| Spent $1,000,000 or more in direct federal grants | Required |
| Spent $1,000,000 or more in “pass-through” funds (via state/local agencies) | Required |
Key Obstacles: Why Identifying Your Status Can Be Tricky
While the rule is straightforward, execution introduces administrative hurdles that frequently catch executive directors and financial officers off guard:
- The Pass-Through Trap: In our experience assisting nonprofits with Single Audits, one of the most common issues is organizations overlooking federal pass-through funding when calculating total federal expenditures. Many nonprofits mistakenly assume that money coming from state-level programs or county grants doesn’t count as federal. If those funds originally rolled down from a federal agency, they are “federal pass-through funds” and count exactly the same toward your $1 million Single Audit threshold.
- The SEFA Preparation Challenges: To prove your compliance status, your team must correctly compile the Schedule of Expenditures of Federal Awards (SEFA). This requires meticulous tracking of pass-through entity identifying numbers, award information, and accurately matching expenditures to the appropriate federal awards.
- Cost vs. Compliance Anxiety: Mission-driven teams frequently worry that specialized audit fees will drain operational dollars. However, failure to comply may result in additional oversight, questioned costs, delayed funding, repayment of certain federal awards, or other enforcement actions depending on the circumstances.
What Nonprofit Executives Need to Do Next
If your organization operates in Michigan, Ohio, New Jersey, or the broader Midwest and Northeast, do not rely on compliance guesswork. Take these immediate steps:
- Evaluate Your Expenditures (Not Revenue): Review your ledger specifically for expenditures tied to federal programs. Ensure your internal accounting tracks exactly when dollars were spent, rather than when the check cleared or when the grant was signed.
- Review Your SEFA Data: Ensure your financial team has isolated all pass-through entity (PTE) identification numbers and Assistance Listings numbers (formerly CFDA). Missing or incomplete information is one of the most common causes of compliance delays.
- Partner with an Experienced Nonprofit CPA: Navigating a federal grant audit alone is an unnecessary administrative burden. To ensure seamless Uniform Guidance compliance and keep your focus on your mission, partner with a specialized external CPA firm.
Learn more about IKRG’s nonprofit audit services and discover how we help organizations prepare for Single Audits, strengthen compliance, and maintain financial accountability.
Partner with Federal Compliance Experts
If your organization is navigating these regulatory updates and requires a trusted partner to handle a CPA Single Audit in Michigan, Ohio, or across the Northeast and Midwest, the team at IKRG CPAS AND CONSULTANTS PC is fully equipped to guide you through every stage of federal oversight.
- Firm Name: IKRG CPAS AND CONSULTANTS PC
- Address: 32238 Schoolcraft Rd Ste 163, Livonia, MI 48150, United States
- Phone: +1 313-492-4254
- Email: info@ikrgcpa.com
- Website: www.ikrgcpa.com
Frequently Asked Questions
1. When is a Single Audit due?
A Single Audit must be submitted to the Federal Audit Clearinghouse either 30 days after you receive the auditor’s report, or nine months after the end of your nonprofit’s fiscal year—whichever comes first.
2. Does non-cash federal assistance count toward the $1 million limit?
Yes. Federal assistance isn’t just cash. Free commodities, food vouchers, loan guarantees, insurance assistance, or direct surplus property received from federal programs must be factored into your total fiscal year expenditures.
3. What happens if our nonprofit fails a Single Audit or misses the deadline?
Depending on the circumstances, failure to submit a clean Single Audit on time may result in additional oversight, delayed funding, repayment of certain federal awards, or other corrective actions.
