Understanding the $750,000 Expenditure Threshold

The $750,000 threshold applies to total federal expenditures, not just grants received. This includes:

• Direct federal funding (e.g., grants, cooperative agreements).
• Pass-through funding (federal funds received via state or local governments).
• Loans and loan guarantees tied to federal assistance programs.

If an entity spends less than $750,000 in federal awards during a fiscal year, it is not required to undergo a Single Audit, though federal agencies may still request a financial review.

Purpose of a Single Audit

The Single Audit is designed to:

• Ensure compliance with federal regulations and grant agreements.
• Assess internal controls to prevent fraud and financial mismanagement.
• Review financial statements to confirm accurate reporting of federal expenditures.

Reporting and Compliance Requirements

If a Single Audit is triggered, the entity must:

1. Engage an independent auditor familiar with GAGAS and federal grant compliance.
2. Prepare a Schedule of Expenditures of Federal Awards (SEFA) to document all federal spending.
3. Submit the audit report to the Federal Audit Clearinghouse (FAC) within nine months after the fiscal year-end or 30 days after receiving the final audit report.

Conclusion

A Single Audit is triggered when an entity spends $750,000 or more in federal funds in a fiscal year. Organizations that meet this threshold must comply with GAGAS and Uniform Guidance to ensure proper financial management and regulatory compliance.