Single Audit

How It Works

The Single Audit was established by the Single Audit Act of 1984 (amended in 1996) and is now governed by the Office of Management and Budget Uniform Guidance at 2 CFR Part 200, Subpart F. It consolidates what would otherwise be separate audits by every federal grantor agency into a single comprehensive audit performed annually by an independent CPA firm. The $750,000 threshold for federal expenditures (increased from $500,000 in 2015) applies to total federal award expenditures, including direct federal grants, pass-through federal funds from states, and loan programs. The audit has two components: (1) a financial statement audit under GAAS (Generally Accepted Auditing Standards) and Government Auditing Standards (the "Yellow Book"), and (2) a compliance audit over "major programs" determined through a risk-based selection process in the Uniform Guidance. Major-program compliance testing covers 14 standard areas: activities allowed, allowable costs, cash management, eligibility, equipment and real property, matching, period of performance, procurement, program income, reporting, subrecipient monitoring, and others. Audit findings can result in required corrective action plans, questioned costs (potentially repayable to the federal government), restrictions on future grant awards, or designation as a "high-risk" grantee subject to enhanced monitoring. Results are reported to the Federal Audit Clearinghouse (fac.gov), operated by the Census Bureau, and are publicly accessible, with machine-readable data available for researchers. The American Rescue Plan Act (ARPA) significantly expanded the number of governments crossing the $750,000 threshold starting in FY2021 as $350 billion in Coronavirus State and Local Fiscal Recovery Funds flowed to thousands of cities and counties. Cities with clean Single Audits and no material weaknesses demonstrate competent financial management; repeat findings are flagged by rating agencies and feed the governance overlay of the CitySpend Fiscal Health Score.

Related Terms

• Comprehensive Annual Financial Report (CAFR/ACFR), A city's official annual financial report, audited by independent accountants, containing detailed financial statements, statistical data, and management discussion.
• Federal Grants, Funding from the federal government to cities for specific purposes, housing, transportation, public health, law enforcement, and environmental protection.