Who needs a single audit: the $1,000,000 threshold and program-specific audits

• Apply the 2 CFR 200.501 expenditure test to the correct fiscal year
• Identify which fiscal years use the $750,000 threshold and which use $1,000,000
• Distinguish a single audit from a program-specific audit under 200.501(c) and (d)
• Separate subrecipient funding from contractor payments when testing the threshold

The rule in 200.501

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 (2 CFR 200.501(a)). Non-federal entities are states, local governments, Indian Tribes, institutions of higher education and nonprofit organizations. For-profit entities sit outside Subpart F: 200.501(i) leaves it to the pass-through entity to set compliance requirements for a for-profit subrecipient.

Three words in the rule drive most of the analysis:

• Expends. The test is federal awards expended, measured under 200.502, not cash received or awards obligated. A $3 million grant with $400,000 of activity this year counts as $400,000.
• During its fiscal year. The entity's own fiscal year sets the period, not the federal fiscal year or the award year.
• Federal awards. Funding received as a recipient or subrecipient counts. Payments received as a contractor for goods or services do not (200.501(g)).

Which threshold applies

OMB revised Subpart F on April 22, 2024. The revision raised the audit threshold from $750,000 to $1,000,000 for auditee fiscal years beginning on or after October 1, 2024. The $750,000 threshold had applied to fiscal years beginning on or after December 26, 2014. The trigger is the start date of the fiscal year, so a June 30 year-end entity used $750,000 for the year ended June 30, 2025 (it began July 1, 2024) and uses $1,000,000 from the year ended June 30, 2026. Calendar-year entities moved to $1,000,000 for calendar 2025. The single audit threshold calculator applies this cutoff for you.

An entity below the threshold is exempt from federal audit requirements for that year, but its records must remain available for review or audit by the federal agency, the pass-through entity and GAO (200.501(e)). Grant agreements, state law and lenders can still require an audit; the exemption only covers Subpart F.

Single audit or program-specific audit

The default is a single audit under 200.514: a financial statement audit and a compliance audit performed together under Government Auditing Standards. A program-specific audit under 200.507 is an election, available only when:

• the entity expends federal awards under only one federal program (excluding research and development), and that program's statutes, regulations or award terms do not require a financial statement audit of the entity (200.501(c)); or
• for research and development, all awards come from the same federal agency (or the same agency and the same pass-through entity) and the agency or pass-through entity approves the program-specific audit in advance (200.501(d)).

When a current program-specific audit guide exists, the auditor follows GAGAS and that guide. When none exists, the auditee and auditor have basically the same responsibilities as for a major program in a single audit (200.507(b)). Most entities with more than one program never qualify.

Contractor or subrecipient

200.501(g) recognizes that one entity can be a recipient, a subrecipient and a contractor at the same time. Only recipient and subrecipient expenditures count toward the threshold and the audit. Getting this wrong cuts both ways: an entity that books fee-for-service contracts as grants can trip the threshold unnecessarily, and an entity that treats a true subaward as a vendor contract can miss a required audit. The subrecipient vs contractor determination guide walks through the 200.331 characteristics.

Frequency and other requirements

Audits are annual. Biennial audits are allowed only for the narrow grandfathered groups in 200.504. A Subpart F audit is in lieu of any other financial audit of federal awards required by federal statute or regulation, but federal agencies, inspectors general and GAO keep the authority to arrange additional audits, which must build on the single audit work (200.503).

Common file mistakes

• Testing the threshold on the wrong fiscal year or using $1,000,000 for a year that began before October 1, 2024.
• Using cash draws or the award amount instead of expenditures under 200.502.
• Leaving out noncash assistance, loan balances with continuing compliance requirements or pass-through funding.
• No documented conclusion on subrecipient versus contractor status for large agreements.

Read the 2024 revisions overview for the other Subpart F changes that came with the new threshold.

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