Receiving a federal grant does not automatically mean a nonprofit organization needs a Single Audit. The requirement generally depends on the amount of federal awards expended during the organization’s fiscal year.

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Under the revised Uniform Guidance, a nonfederal entity that expends $1 million or more in federal awards during its fiscal year is generally required to undergo a Single Audit or, in certain circumstances, a program-specific audit. The previous threshold was $750,000.

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This distinction is particularly important for nonprofits because federal funding may not always come directly from a federal agency. Funding passed through a state agency, municipality, school district, or other organization may still represent federal assistance.

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Organizations should maintain records identifying the source of grant funding, Assistance Listing numbers when applicable, award and pass-through information, and expenditures associated with each federal program.

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It is also important to remember that the threshold is based on federal expenditures, which may not always equal the amount of cash received during the year.

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Even organizations below the threshold should maintain strong grant documentation and comply with award requirements. Federal agencies and pass-through entities may still have monitoring or audit rights.

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If your nonprofit receives significant government funding or is approaching the $1 million threshold, evaluating your federal awards before year-end can provide time to determine the appropriate audit requirements and prepare the necessary records.