Single Audit Requirements for Nonprofits: The $1 Million Threshold Explained

TL;DR

Single audit requirements apply when a nonprofit expends $1,000,000 or more in federal awards during its fiscal year, under 2 CFR 200.501. That threshold rose from $750,000 in the 2024 Uniform Guidance revision, the first change since 1997. The complication almost nobody explains is that the new number does not apply to every award. Federal awards issued before 1 October 2024 remain subject to the old $750,000 threshold, which means a nonprofit that spent $900,000 in federal funds can still be required to obtain a Single Audit if the older awards apply. That dual position will persist through 2026 and beyond for any organisation holding multi year grants that straddle the effective date. This guide explains what triggers the requirement, how to work out which threshold applies to each of your awards, what the audit costs, and how to prepare well before an auditor asks.

KEY TAKEAWAYS

• The Single Audit threshold is $1,000,000 in federal awards expended, under 2 CFR 200.501, for fiscal years beginning on or after 1 October 2024.
• Awards issued before that date remain subject to the previous $750,000 threshold, creating a dual position that persists for multi year grants.
• The threshold counts money expended, not money received or awarded. Timing of spend determines the trigger, not the size of the grant.
• Falling below $1,000,000 removes the federal requirement but not obligations from state law, funder terms, lender covenants or your own board policy.
• A Single Audit typically costs between $15,000 and $100,000 or more depending on organisation size and programme complexity.
• The Schedule of Expenditures of Federal Awards should be built during the year, not after fieldwork starts. Building it late is the most common cause of delays and preventable findings.
• The same 2024 revision raised the de minimis indirect cost rate from 10 percent to 15 percent, which many smaller recipients have not yet claimed.

What Is a Single Audit and Who Needs One?

Single audit requirements apply to organisations that spend federal money above a set level. A Single Audit is a combined financial and compliance examination required of organisations that spend federal award money above a set amount in a fiscal year. It goes considerably further than a standard financial statement audit, because it tests not only whether the numbers are right but whether the money was spent in line with the terms attached to it.

The requirement comes from the Single Audit Act of 1984, amended in 1996, and is governed today by Subpart F of the Uniform Guidance at 2 CFR Part 200. It applies to nonprofits, state and local governments, universities and tribal organisations. In the 2024 revision, the Office of Management and Budget replaced the term non federal entity with recipient and subrecipient throughout much of the text, so newer guidance uses that language.

For most Delaware nonprofits the question arrives suddenly. An organisation wins a federal grant, or receives federal money passed through a state agency, and discovers a compliance obligation nobody budgeted for. If you are working out where this sits alongside your other filings, our Delaware nonprofit compliance calendar sets out the full annual picture.

What Exactly Triggers the Requirement?

Single audit requirements are set out in 2 CFR 200.501. A recipient that expends $1,000,000 or more in federal awards during its fiscal year must obtain either a Single Audit or, in limited circumstances where all the money comes from one programme, a programme specific audit.

Three words in that sentence do most of the work, and each is misread regularly.

Expends. The test is money spent during the fiscal year, not money awarded, not money received, and not the headline value of the grant. A three year $2,400,000 award spent evenly contributes $800,000 a year and may never trigger the requirement on its own. A $600,000 award drawn down entirely in one year contributes $600,000 to that year.

Federal awards. This includes money received directly from a federal agency and money passed through a state or local government or another nonprofit. Pass through funding counts, and organisations frequently miss it because the cheque arrives from the state rather than from Washington. Check the award letter for a federal assistance listing number.

During its fiscal year. Your fiscal year, not the federal one. An organisation with a June year end tests June to June, which matters when a large drawdown falls either side of the boundary.

Add together every federal dollar expended across every programme. The threshold is organisation wide, not per grant.

Why Might the $750,000 Threshold Still Apply to You?

This is the part that catches finance teams out, and it is almost entirely absent from published guidance aimed at smaller nonprofits.

The threshold change applies to federal awards issued on or after 1 October 2024. Awards issued before that date remain governed by the previous version of the Uniform Guidance, including the $750,000 trigger. For an organisation holding only new awards, the position is simple. For an organisation holding multi year grants that began before October 2024 and continue past it, two thresholds are live at once.

A worked example. A nonprofit holds two active federal awards. The first is a three year grant issued in September 2024, so the old guidance and the $750,000 threshold apply to it. The second is a cooperative agreement issued in January 2025, governed by the new guidance and the $1,000,000 threshold. During the fiscal year the organisation expends $900,000 across both. Under the new threshold alone it would fall short of the trigger. Because the older award carries the lower threshold, a Single Audit may still be required.

The Office of Management and Budget recommends keeping a tracking schedule of awards by issue date so that the correct version of the guidance can be identified for each. Auditors now ask which version applies to each major programme before selecting test procedures, so being able to demonstrate this is no longer optional.

The practical instruction is simple. Do not plan on the $1,000,000 figure alone until you have confirmed the issue date of every active federal award. An organisation sitting between $750,000 and $1,000,000 in expenditure is in exactly the range where this matters most.

What Else Changed in the 2024 Revision?

The threshold received most of the attention, but four other changes to the single audit requirements affect budgeting and compliance directly, and several represent money that recipients can claim.

The de minimis indirect cost rate rose from 10 percent to 15 percent of modified total direct costs, under 2 CFR 200.414(f). Recipients and subrecipients without a current federally negotiated rate may elect to charge up to 15 percent. For smaller grantees this materially increased the indirect cost recovery available, and a number of organisations have still not made the election.

The Type A programme threshold rose to $1,000,000 for recipients with total federal awards expended of $34 million or less, up from $25 million. Type A programmes receive more intensive testing, so this determines how much of your audit is spent on which grants.

The subaward exclusion for modified total direct costs moved from $25,000 to $50,000, which changes indirect cost calculations for organisations that pass money to subrecipients.

The equipment capitalisation floor rose from $5,000 to $10,000, reducing the volume of items requiring capital tracking.

A further proposal published in May 2026 refines Subpart F but does not alter the threshold. Organisations should continue planning around the $1,000,000 trigger.

What Does a Single Audit Actually Cost?

Published ranges run from roughly $15,000 to $100,000 or more, and the spread reflects real differences rather than pricing variation.

The drivers are the number of federal programmes, whether any qualify as Type A and therefore receive full compliance testing, the quality of your records, whether you pass money to subrecipients, and how much remediation the auditor has to do because documentation is incomplete.

The last of those is the only one you control in the current year, and it is worth more than the others combined. An organisation that presents a complete Schedule of Expenditures of Federal Awards, clean procurement documentation and evidence of subrecipient monitoring will be quoted materially less than one that hands over a folder and a hope.

One further point on cost that deserves stating plainly. If you are close to the threshold, timing of expenditure legitimately affects whether a Single Audit is required. Scheduling spend so that no single fiscal year crosses the line is a reasonable planning decision. Artificially delaying or accelerating spending purely to avoid the audit is not, and it creates a compliance risk of its own.

Does Falling Below the Threshold Mean No Audit?

It removes the federal single audit requirements for that year. It does not necessarily remove your obligation to have a nonprofit audit at all, and treating those as the same thing is a common and expensive assumption.

Four other sources of obligation survive independently. State law may require a nonprofit audit at a lower threshold, and several states set their own trigger. Individual funder terms frequently require an audited financial statement regardless of federal totals. Lenders often require audited statements as a covenant. And your own board policy or bylaws may specify an annual audit, which many organisations forget is a self imposed requirement they can also amend.

Before concluding that a year requires no audit, check all four. The answer changes what your finance calendar looks like and what you need to budget. Our nonprofit accounting team works through this with clients each year, because the answer often differs from the assumption.

How Should You Prepare Before the Auditor Arrives?

Preparing for single audit requirements is almost entirely a bookkeeping question, which is why it is worth handling during the year rather than in the six weeks before fieldwork.

1. Build the Schedule of Expenditures of Federal Awards continuously. The SEFA lists every federal award expended, by programme and assistance listing number. Building it after fieldwork begins is the single most common cause of delays, scope expansion and preventable findings.
2. Track awards by issue date. Maintain a schedule showing which version of the Uniform Guidance governs each award, because the auditor will ask before selecting test procedures.
3. Separate federal expenditure in the general ledger. If federal and unrestricted money share account codes, someone will spend days unpicking it later at audit rates.
4. Document procurement as it happens. Quotes, selection rationale and approvals are far easier to produce in the month they occurred than eighteen months afterwards.
5. Evidence subrecipient monitoring. If you pass federal money onward, you are responsible for monitoring how it is used, and the evidence needs to exist contemporaneously.
6. Resolve prior year findings before they repeat. Recurring findings signal control weakness to auditors and funders even when the questioned amount is small.

Most of this is ordinary bookkeeping discipline applied with a specific structure. Organisations that run clean monthly closes find Single Audit preparation adds weeks rather than months, which is one reason outsourced bookkeeping tends to pay for itself in audit years.

Summary

Single audit requirements apply when a nonprofit expends $1,000,000 or more in federal awards during its fiscal year, under 2 CFR 200.501. The threshold rose from $750,000 in the 2024 Uniform Guidance revision, the first change in 27 years. The detail that matters most, and that most guidance omits, is that awards issued before 1 October 2024 remain subject to the old $750,000 figure. An organisation expending $900,000 across a mix of older and newer awards can still be required to obtain a Single Audit.

Test against both thresholds until every active award has been checked by issue date. Remember that the count is money expended rather than awarded, and that pass through federal funding received from a state agency counts in full. If you fall below the trigger, confirm separately whether state law, funder terms, lender covenants or board policy still require an audit. And build the Schedule of Expenditures of Federal Awards during the year, because building it after fieldwork starts is the most reliable way to turn a manageable audit into an expensive one.

Not sure which threshold applies to your awards? That question takes an afternoon to answer properly and saves a great deal later. Talk to Breakwater about your federal expenditure position, or read more about our nonprofit accounting services. If your earned revenue is also growing, our guide to UBIT covers the other tax question nonprofits ask us most.

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