Single audit
A single audit is an audit of an organization that spends federal awards above a set level in a year. It covers the organization's financial statements and also its compliance with the rules that come with the money.
In the United States, the requirement comes from the federal Uniform Guidance.
This entry is part of the Fairview Audit glossary. It gives a general picture. It does not decide whether your organization needs one.
Why a single audit matters in a cost review
Grant money comes with conditions. A single audit asks whether the organization spent that money the way the rules allow. Findings can lead to corrective action and can affect future funding. [VERIFY: confirm the consequences of audit findings under the current federal rules]
For finance leads, the cost side is practical. Spending that cannot be supported, vendor charges that do not match their contracts and weak internal records can all show up as findings. A review of costs and contracts before the audit can reduce surprises. Partner firms in our network cover this under grant and single-audit compliance.
A plain-words illustration
Picture a community organization that receives federal funds through a state agency to run a program. During the year it pays staff, buys supplies and signs a lease for program space. At year end, an independent auditor reviews the financial statements. The auditor also picks federal programs to test and checks whether charges to those programs were allowed, supported and recorded correctly.
A lease payment charged to the program is one example. The auditor may ask whether the amount matches the lease and whether the cost is allowable under the grant. If the answer is no, that is a finding.
Who it applies to
In general terms, the requirement applies to non-federal entities such as nonprofits, state and local governments and some other bodies that spend federal awards above a stated threshold. It applies to organizations that receive awards directly and to those that receive them through another body. For-profit businesses are generally outside the requirement. Payments for goods or services provided as a contractor are treated differently from awards. [VERIFY: confirm the current threshold, scope and exclusions in the Uniform Guidance]
An organization with only one federal program may have another option in some cases. Ask your auditor which route fits.
How it shows up in a review
A partner firm may be asked to look at:
- whether costs charged to a grant match the contracts, invoices and payment records behind them
- whether the organization keeps the support that the award terms require
- whether the schedule of federal spending ties to the accounting records
- whether earlier findings were followed up
The audit itself is done by an independent auditor under government auditing standards. A partner firm helping you prepare is a separate role. [CONFIRM: a partner firm supplies and approves what it offers for single audit preparation]
Related contract work may fall under supplier contract compliance, since vendor billing feeds the costs charged to grants.
Common mistakes
- Waiting until the audit starts. Gaps in records are easier to fix beforehand.
- Mixing grant and non-grant costs. Charges must be assigned to the right funding.
- Losing support documents. Each cost needs a trail from invoice to payment.
- Assuming a clean financial audit is enough. The single audit also tests compliance.
- Ignoring subrecipients. If you pass money on to others, you have monitoring duties.
Note: This entry is general information and not legal or audit advice.
Related terms and pages
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