Why you shouldn’t stress about your nonprofit’s single audit

by Joe Wallis, CPA, and Paige Winkelman, CPA

Most people cringe when they hear the words “single audit.”

True, the Single Audit—an annual comprehensive financial statement and federal awards audit required of organizations that hit $750,000 in federal expenditures during their fiscal year—has garnered more attention (and perhaps more contempt) than ever in the last few years thanks to the ubiquity of federal COVID relief funds. Many nonprofits and governmental organizations reached the audit’s expenditures threshold for the first time—and are continuing to do so.

But here’s the thing: There’s no need to fear the Single Audit.

Although having to go through a Single Audit may feel complicated and scary, there are a plenty of easily accessible resources available to help you do it right. And you don’t have to do it on your own.

Here are a few things you can do for a stress-free Single Audit.

Understand your award letter and program.

Once your organization signs an award agreement that includes federal funds, it must comply with specific terms and conditions—including the Office of Management and Budget’s Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, and 2 CFR Part 200, which is more commonly known as Uniform Guidance—in addition to following all requirements related to your federal award program.

Generally, this means having adequate internal controls over every penny of award dollars you spend. If your organization fails to comply, you could be stuck spending thousands of dollars to fix your errors. Your organization could even be subject to federal penalties.

Turn to your awarding agency for help.

The Single Audit is a shared responsibility between the grantor and the grantee; your award document should outline exactly what your organization must do to comply. Unfortunately, this might simply be a blurb that says “adhere to Uniform Guidance.”

Regardless, as a recipient or subrecipient, you have every right to call your federal awarding agency or pass-through grantor and ask for guidance. Per Uniform Guidance, an awarding agency or pass-through grantor must include certain language in the award document and be responsive and willing to work with its award recipients. In addition to your federal award program representative, you can reach out to a CPA knowledgeable of Uniform Guidance with questions.

Review the freely available Compliance Supplement.

The federal government releases a compliance supplement that explains everything you need to know about the Single Audit. Housed at whitehouse.gov, the supplement gives you a list of what your auditor will test based on your organization’s federal program. (If you search for an award program, there will be five to 20 pages to help you prepare for it.) It even provides you with examples of internal controls and helpful resources.

Work with a Single Audit expert.

The most important thing to remember is that you’re not alone in this. You can go to your grantor. You can look up the compliance supplement at whitehouse.gov. There are people in your corner who enjoy doing this, too!

At Abdo, our team of nonprofit experts is ready to conduct your Single Audit. We will coach you through the audit process and make recommendations for how to mitigate any issues we find. If you just want help preparing for an upcoming Single Audit or addressing prior year findings, we can help you with this, too! As a separate service, one of Abdo’s nonprofit consultants will work with you to make sure you’re well prepared to tackle anything the Single Audit brings your way.

If you’re ready for a stress-free Single Audit, contact us today.