Single Audits: What You Need to Know About the OMB’s Uniform Guidance Changes

Date July 11, 2024
Article Authors
Dante Penza

Simply put, a single audit is a full-scale audit of the financial statements and, schedule of expenditures of federal awards, including the entity’s internal controls over financial reporting and compliance with those awards. Single audits intend to ensure accountability in spending funds awarded by the federal government and provide assurance that federal funds are used in accordance with governing laws and regulations. The rigorous, organization-wide audit provides a high level of transparency and trust in public administration.

While federal agencies, including the Office of Inspector General, play a crucial role in overseeing and conducting audits, a single audit is typically performed by independent, public accounting firms. Single audits are most commonly conducted for such entities as state and local governments, universities, and nonprofits that more commonly receive federal funds.

Under the Single Audit Act, entities that expend $750,000 or more of federal funds during a reporting period have been subject to a single audit. But recently the Office of Management and Budget (OMB), the federal agency responsible for developing and executing budgets at the federal level, revised its Uniform Guidance to increase that threshold to $1 million for periods that begin on or after October 1, 2024. The increase is a huge win for small and medium-sized entities that can be burdened by the time and cost required by the single audit process.

Other significant OMB changes are the increases in the Type A program and equipment thresholds as well as the de minimus indirect cost rate. The changes are interpreted such that the Type A program threshold increases from $750,000 to $1 million, while the threshold that requires entities to capitalize equipment increases from $5,000 to $10,000. The de minimus indirect cost rate increases from 10 to 15 percent, which allows an entity that received federal funds to charge a 15 instead of 10 percent de minimus rate of modified total direct costs, up to the first $50,000 (previously $25,000) of each sub award, regardless of the period of performance. The increase allows the entity to recoup more of its indirect costs, such as office space, general maintenance, and utilities.

Other key auditee changes reflected in the revised Uniform Guidance (and their Guidance sections):

  • Emphasis that recipients/subrecipients must document internal control [200.303(a)]
  • That recipient/subrecipients must take reasonable cybersecurity and other measures to safeguard info including protected personally identifiable info and other types of info [200.303€]
  • Increase in threshold to remit unused supplies from $5k to $10k [200.314(a)]
  • Procurements by states and Indian Tribes allowing Indian Tribes to be treated the same as states and follow their own procurement policies [200.317]
  • Fixed amount subawards increased threshold from previous simplified acquisition threshold to $500k [200.333]
  • Requirements that subrecipients certify to the pass-through entity whenever applying for funds requesting payments and submitting reports (applicable to all tiers of subrecipients) [200.415(b)]
  • Removal of requirement for an IHE that receives aggregate total of $50M or more to submit a disclosure statement [200.419]

The Single Audit Act of 1984 and its amendments have been instrumental in promoting sound financial management and reducing audit burdens. The OMB’s 2024 changes are likely to ease the burden of entities subject to single audits, including the state and local governments that must comply with the Single Audit Act to ensure proper use of federal funds. Entities should consider revising internal policies and internal controls to adapt to the changes, as well as continue to look for additional guidance from the OMB.

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