Organizations that expend $1 million or more in federal grant funding within a fiscal year are subject to a single audit. For CFOs, compliance directors, and other executives charged with financial oversight, understanding this requirement — and the internal controls it demands — is a core governance responsibility, not a peripheral compliance matter.
What Is A Single Audit
A single audit is a rigorous, organization-wide financial and compliance examination required of non-federal entities — including states, local governments, nonprofits, and institutions of higher education — that meet the federal expenditure threshold. The audit was formerly conducted under OMB Circular A-133; the requirement is now codified under 2 CFR Part 200, Subpart F, though some practitioners still use the older terminology.
The audit examines two areas: the organization's financial statements, internal controls, and supporting documentation, and its compliance with the specific terms and requirements of each federal program.
The Purpose of the Audit
A single audit is designed to determine whether an organization maintains a viable financial management system with adequate internal controls, whether its financial statements are fairly presented in accordance with generally accepted accounting principles (GAAP), whether its financial and reimbursement reports are supported by accurate data and documents, and whether federal funds were used in accordance with award terms, applicable law, and program-specific requirements.
The Role of the OMB Compliance Supplement
Each year, OMB publishes a Compliance Supplement that directs independent auditors on which six of the twelve compliance requirements to test for each major program, and how to test them. This document materially shapes the scope and focus of every single audit conducted that year. The 2025 Compliance Supplement was released in November 2025, approximately six months after its expected publication date.
It should be noted that in the proposed revisions to Uniform Guidance published by the Office of Management and Budget on May 29, 2026, the term "annual" has been proposed to be removed from where it is currently at § 200.513(c)(4).
Findings, Corrective Action, and Root Cause
A single audit finding is a formal deficiency identified by auditors related to an organization's compliance with federal program requirements or its internal controls over federal spending. Findings typically involve questioned costs, insufficient documentation, or noncompliance, and require a formal Corrective Action Plan. Auditee and auditor responsibilities under this process are set out at 2 CFR §§ 200.500–507.
Recurring findings most often trace back to one of several root causes: insufficient documentation supporting costs charged to the award, time and effort reporting inconsistent with approved budgets, procurement processes that do not meet federal standards, gaps in subrecipient monitoring, or outdated written policies and procedures. Addressing the underlying cause — rather than the individual finding alone — is what prevents recurrence in subsequent audit cycles.
Building Audit Readiness
Audit readiness is most effectively maintained as a continuous organizational practice rather than an annual preparation sprint. This includes centralized documentation; early review of the applicable Compliance Supplement if applicable to your organization's grants; regular staff training on program-specific compliance requirements; and engagement of outside compliance expertise before gaps become documented findings.
For organizations seeking a practical starting point on documentation standards, GrantWin's Supporting Documentation and Cost Allowability Primer for Federal Grantees is available for download below.
[Download the Supporting Documentation and Cost Allowability Primer for Federal Grantees →]
GrantWin Consulting is a federal grant consulting and training firm based in Atlanta, GA, supporting organizations across the full grant lifecycle — from identifying and securing funding to managing and maintaining compliance with federal, state, and private funding requirements. Our services include compliance gap assessments, financial management systems design, development of required written policies and procedures, and audit readiness support. Learn more about our training programs, including the Federal GrantIQ Training Series and the GrantWin Grant Collective, below. Our training is accredited for continuing education credit through NASBA, CFRE, and GPCI.
