Single Audit Requirements: What Happens at $1 Million in Federal Funds

What triggers a Single Audit?

If your business or nonprofit spends $1,000,000 or more in federal awards during your fiscal year, you are required to undergo a Single Audit. That threshold was raised from $750,000 to $1 million under the revised Uniform Guidance (2 CFR 200), effective for fiscal years beginning on or after October 1, 2024 — so if your fiscal year starts in October, this is likely the first year the new number actually applies to you.

The key word is "spent," not "awarded." You can win a $2 million grant, but if you only drew down and expended $600,000 of it in a given fiscal year, you haven't crossed the line yet. This matters for cash-flow and award-timing decisions, especially if you're juggling multiple federal grants or cost-reimbursable contracts at once.

Single Audits aren't limited to grant recipients. They apply to any non-federal entity — nonprofits, states, local governments, and in some cases for-profit companies acting as pass-through subrecipients — that meets the spending threshold, regardless of how many different federal awards make up that total.

What a Single Audit actually covers

A Single Audit (governed by 2 CFR 200 Subpart F, often still called an "A-133 audit" by people who haven't updated their vocabulary) is really two audits bundled together:

• A standard financial statement audit — the same GAAP-based audit a clean organization would get anyway, covering your overall financial position.
• A compliance audit over "major programs" — a deeper look at whether you followed the specific rules attached to your largest or highest-risk federal awards.

Auditors don't test every federal dollar equally. They use a risk-based approach outlined in the Uniform Guidance to identify which programs count as "major" — generally your largest federal funding sources, plus any program flagged as higher-risk based on past findings, newness, or complexity. For each major program, the auditor tests compliance against specific requirements: allowable costs, cash management, eligibility, procurement standards, reporting, and subrecipient monitoring, among others.

This is the piece that catches people off guard. You can have pristine books and still get findings because a subaward agreement was missing required clauses, or because your procurement process didn't document competition the way 2 CFR 200.320 requires.

Who performs the audit, and what it costs

A Single Audit has to be performed by an independent, licensed CPA firm — not your regular bookkeeper, and not someone who also manages your federal compliance day-to-day (that's a conflict of interest auditors will flag immediately).

Cost varies widely based on the number of major programs, the complexity of your federal awards, and whether this is your first Single Audit (first-year audits almost always cost more because the auditor has to build everything from scratch). Realistic ranges, based on what CPA firms and nonprofit finance networks typically report:

• $10,000–$25,000 for a straightforward single-major-program audit at an organization just over the $1M threshold
• $25,000–$60,000+ for organizations with multiple major programs, subrecipients, or prior findings
• $60,000+ for larger or more complex entities with several federal funding streams and heavier subrecipient monitoring obligations

These are directional, not quotes — get bids from at least two or three firms that have specific Single Audit experience, because general auditors without federal compliance background tend to underbid and then scope-creep you once they realize what's involved.

The Federal Audit Clearinghouse submission

Once the audit is complete, you don't just file it away. You're required to submit the reporting package to the Federal Audit Clearinghouse (FAC), which moved to a new system hosted by the General Services Administration in 2023. The submission is due the earlier of 30 days after you receive the auditor's report or 9 months after your fiscal year end.

The FAC submission becomes part of the public record — your awarding agencies, and often the general public, can look it up. This is worth internalizing: a clean Single Audit history is a quiet credibility signal the next time you're competing for a grant or a federal contract. A history of unresolved findings is the opposite.

Findings and corrective action plans

If the audit turns up a finding — a deficiency in internal controls, a case of noncompliance, or a questioned cost — you're not done when the report is filed. You're required to prepare a corrective action plan (CAP) addressing each finding: what happened, what you're going to do about it, and your timeline.

Findings aren't automatically catastrophic. Minor ones (a missing signature on a timesheet, a late report) are common, especially for first-time auditees, and agencies generally care more about whether you fix them than whether you had them. What agencies do watch closely is repeat findings — the same issue showing up two years in a row signals you didn't actually implement the corrective action, and that can affect your risk rating on future awards, sometimes triggering more restrictive award conditions or more frequent monitoring.

How to prepare the year before you cross the threshold

The smartest time to prepare for a Single Audit is the fiscal year before you expect to hit $1 million in federal spending, not after.

1. Map your federal awards now. List every federal grant and cost-reimbursable contract, who's funding it, and your projected spend-down for the year. If you're close to $1M, model the timing of drawdowns.
2. Get your procurement documentation in order. 2 CFR 200.320 procurement standards are one of the most commonly cited finding areas — make sure competitive bids, sole-source justifications, and contract files are complete and consistent.
3. Clean up subaward agreements. If you pass funds to subrecipients, their agreements need the required federal award identification clauses. Missing these is a classic finding.
4. Talk to an audit firm early. Many CPA firms will do a light pre-audit readiness review for a fraction of the full audit cost — worth it if this is your first time.
5. Tighten your internal controls narrative. Auditors will ask you to describe your internal control environment over federal awards. If you can't articulate it clearly, that's a red flag before they've tested anything.

This is also where a lot of small organizations quietly start leaning on software instead of adding headcount, because the compliance side of federal awards — tracking award terms, flagging procurement thresholds, organizing subaward documentation — is exactly the kind of structured, repetitive work that's easy to automate and easy to get wrong manually. If you're trying to figure out whether your current systems will hold up under audit, it's worth getting a second set of eyes before your auditor is the first one to find the gap (book a 15-minute walkthrough).

The bottom line

Crossing $1 million in federal spending isn't a penalty — it's a sign your federal funding is growing. But the Single Audit requirement that comes with it is real, recurring, and not something to treat as a once-a-year fire drill. Organizations that keep procurement files clean, subaward documentation current, and internal controls well-documented year-round spend less on audit fees, get fewer findings, and look better to every future grantor or contracting officer who checks the Federal Audit Clearinghouse before awarding them more money.

If you're weighing whether to hire a compliance analyst to manage this versus using a platform built for exactly this kind of federal award tracking, it's worth comparing the real numbers side by side (see what InstaGovOps costs vs hiring this in-house).