The first question in a federal award audit is whether one is required at all. Section 200.501 of the Uniform Guidance, in Subpart F of 2 CFR part 200, answers it with a dollar test applied to each fiscal year: a non-Federal entity that expends $1,000,000 or more in Federal awards during its fiscal year must have a single audit or a program-specific audit for that year. Everything else in Subpart F follows from a yes on that test, and the work of getting it right is in the definition of what counts as Federal awards expended.
This page paraphrases the regulation as it reads on eCFR. Read 2 CFR part 200, Subpart F, for the full text.
What changed with the 2024 revision?
OMB's April 2024 revision of the Uniform Guidance raised the audit threshold from $750,000 to $1,000,000. In the preamble OMB said it considered the number of entities that would benefit, the types of auditor opinions issued and the questioned costs, and that the increase aligned closely with the Consumer Price Index since the last increase in 2014. The revised guidance has an effective date of October 1, 2024. National and regional CPA firm guidance applies the $1,000,000 threshold to non-Federal entity fiscal years beginning on or after that date. A fiscal year that began before October 1, 2024 stays on the $750,000 test.
| Fiscal year begins | Threshold |
|---|---|
| July 1, 2024 (FY ending June 30, 2025) | $750,000 |
| October 1, 2024 (FY ending September 30, 2025) | $1,000,000 |
| January 1, 2025 (calendar 2025) | $1,000,000 |
The revision also raised the equipment threshold in the definitions from $5,000 to $10,000.
What does 200.501 require?
| Paragraph | Rule |
|---|---|
| (a) | A non-Federal entity that expends $1,000,000 or more in Federal awards during its fiscal year must have a single or program-specific audit conducted for that year |
| (b) | A single audit is conducted under 200.514 unless the entity elects a program-specific audit under (c) or (d) |
| (c) | A program-specific audit may be elected if the entity expends Federal awards under only one Federal program (excluding research and development) and the program's statutes, regulations or award terms do not require a financial statement audit |
| (d) | For research and development, a program-specific audit may be elected if all awards are from the same Federal agency, or the same agency and pass-through entity, and the agency or pass-through entity approves in advance |
| (e) | An entity expending less than $1,000,000 is exempt from Federal audit requirements for that year, except as noted in 200.503, but its records must be available for review by Federal agency, pass-through entity and GAO officials |
| (g) | Awards expended as a recipient or subrecipient are subject to audit unless a Federal statute exempts the program. Payments received as a contractor for goods or services are not |
| (h) | The auditee's compliance responsibility for contractors is generally to ensure procurement, receipt and payment comply with Federal requirements. If a contractor is made responsible for meeting program requirements, the auditee must ensure they are met, and for a major program the audit includes whether those transactions comply |
| (i) | Subpart F does not apply to for-profit subrecipients, so the pass-through entity sets and monitors their compliance requirements |
What counts as Federal awards expended?
Section 200.502 says the determination is based on when the activity related to the Federal award occurs, meaning events that require compliance with Federal statutes, regulations and the award's terms. Its list includes expenditures under grants, cooperative agreements and cost-reimbursement contracts, disbursements of funds to subrecipients, use of loan proceeds under loan and loan guarantee programs, receipt of property, receipt or use of program income, distribution of food commodities, interest subsidies and periods when insurance is in force.
The details that change the answer:
- Loans. The value expended is new loans made or received in the period, plus the balance of loans from earlier years where the Federal Government imposes continuing compliance requirements, plus any interest subsidy, cash or administrative cost allowance. Loans whose only continuing requirement is repayment are excluded.
- Endowment funds. The cumulative balance of federally restricted endowment funds counts in each period the funds remain restricted.
- Free rent. Free rent alone is not an award expended. Free rent received as part of a Federal award to carry out a program is included.
- Non-cash assistance. Items such as food commodities and donated surplus property are valued at fair market value at receipt, or the assessed value from the Federal agency.
- Medicare and Medicaid. Medicare payments for patient care and Medicaid payments to a subrecipient for patient care are not awards expended, unless a State requires the funds to be treated as Federal awards.
An illustration, with invented numbers: a nonprofit spends $640,000 under a direct HHS grant, receives $280,000 as a subrecipient from a state agency, and distributes food commodities valued at $120,000. The total is $640,000 + $280,000 + $120,000 = $1,040,000, which crosses the threshold. Without the commodities the total is $920,000 and no audit is required. Entities that track only cash grants miss this and find out from the auditor.
How does it relate to other audits and how often is it done?
Section 200.503 says an audit under this part is in lieu of any other financial audit of Federal awards the entity must undergo under another Federal statute or regulation, and Federal agencies must rely on the information it provides to the extent it meets their needs. Federal agencies, Inspectors General and GAO may still conduct additional audits, which must be planned not to duplicate other audits. Before starting one, the agency or pass-through entity must review the Federal Audit Clearinghouse for recent audits. An agency can ask that a particular program be audited as a major program, at least 180 calendar days before the end of the fiscal year, and must pay the full incremental cost if the program would not otherwise be major.
Section 200.504 requires annual audits. Biennial audits are permitted only for states, local governments and Tribes whose constitution or statute in effect on January 1, 1987 requires less frequent audits, and for nonprofits that had biennial audits for all biennial periods ending between July 1, 1992 and January 1, 1995.
The audit, the data collection form and the reporting package are due within 30 calendar days after the auditee receives the auditor's report or nine months after the end of the audit period, whichever is earlier (200.512(a)(1)). If the due date falls on a weekend or Federal holiday, it moves to the next business day.
What do practitioners do with this?
Practice observations built from the text, not requirements of the regulation:
- Run the test every year. The threshold applies to each fiscal year, so a nonprofit at $900,000 one year and $1,100,000 the next goes from exempt to audited.
- Build the expended schedule early. Start from the SEFA and reconcile to the general ledger, then add non-cash assistance, loans and subrecipient disbursements that are not grant expense lines.
- Clear contractor versus subrecipient status under 200.331 for each payee. See subrecipient monitoring.
- Put the requirement in the engagement letter. The single audit engagement letter states the Subpart F scope and the reporting package deadline.
- Keep the records available even in a year with no audit requirement. Paragraph (e) keeps access for Federal agencies, pass-through entities and GAO.
Frequently asked questions
What is the single audit threshold now?
$1,000,000 in Federal awards expended in the entity's fiscal year, under 2 CFR 200.501(a), for fiscal years beginning on or after the revised guidance's October 1, 2024 effective date.
Is a single audit required below the threshold?
No. An entity expending less than $1,000,000 is exempt from Federal audit requirements for that year, but its records must be available for review by Federal agencies, pass-through entities and GAO, and an agency or pass-through entity may still use other monitoring tools.
Do Medicare and Medicaid payments count toward the threshold?
Medicare payments for patient care do not count. Medicaid payments to a subrecipient for patient care do not count unless a State requires the funds to be treated as Federal awards expended.
Can an entity elect a program-specific audit?
Yes, when it expends awards under only one Federal program (excluding research and development) and the program does not require a financial statement audit. Research and development has separate conditions, including advance approval.
Sources
- eCFR, 2 CFR 200.501, 200.502, 200.503, 200.504 and 200.512 (current text, retrieved November 2026): ecfr.gov
- OMB, Guidance for Federal Financial Assistance, 89 Fed. Reg. 30046 (April 22, 2024), preamble discussion of 200.501 and the October 1, 2024 effective date: federalregister.gov
- 31 U.S.C. chapter 75 (Single Audit Act)
Related
Part of CORAA University · Government, single audit and nonprofits: related guides, calculators and templates.
AU-C references are to AICPA Professional Standards, paraphrased here; read the standard itself before relying on a requirement. This page is guidance, not professional advice. Report an error