Grant Management
Single Audit and 2 CFR 200 Compliance Explained
Daniel Rourke, MPA
May 7, 2026 · 4 min read
Table of contents
Key takeaways
- A single audit is required when an organization expends $750,000 or more in federal funds in its fiscal year.
- The single audit is governed by 2 CFR 200 Subpart F, the Uniform Guidance.
- It covers both financial statements and federal program compliance, not just one award.
- Year-round records, internal controls, and reconciled reports make the audit routine rather than a crisis.
A single audit is an organization-wide examination required when a non-federal entity expends $750,000 or more in federal funds during its fiscal year, governed by 2 CFR 200 Subpart F, the Uniform Guidance. It reviews both your financial statements and your compliance with federal program requirements, and it is performed by an independent auditor and filed with the Federal Audit Clearinghouse. The single audit replaces a patchwork of award-by-award audits with one comprehensive review.
Why the single audit exists
Before the single audit, an organization with several federal awards could face a separate audit for each one, duplicative for the grantee and the government alike. The single audit concept consolidated that into one annual review covering all federal money the entity spent. It is the federal government's primary tool for verifying that recipients honor the rules attached to public funds.
For your organization, the audit is also an unforgiving test of how well you ran the year. An auditor cannot reconstruct good internal controls in a week. The findings you receive are a direct reflection of the discipline in your everyday post-award grant management. Treat the audit as a year-round commitment, not a spring event.
The $750,000 threshold, in detail
The trigger is expenditures, not awards received. You combine federal funds spent across every program in your fiscal year, and if the total reaches $750,000, the single audit applies.
A few nuances matter:
- Expended, not awarded. A $1 million award spent over three years may keep annual expenditures below the threshold.
- All federal sources combined. Direct federal awards and federal funds passed through a state or another entity both count.
- Subrecipient pass-through counts to the subrecipient. If you receive federal money through a state agency, those expenditures count toward your threshold.
Track federal expenditures monthly so you know well before fiscal year-end whether an audit is coming. Surprises in this area are expensive.
What the single audit examines
The single audit has two halves, and both are mandatory above the threshold.
| Component | What the auditor tests |
|---|---|
| Financial statement audit | Whether your financial statements are fairly presented |
| Compliance audit | Whether you followed federal program requirements under 2 CFR 200 |
The compliance half is what distinguishes a single audit from an ordinary financial audit. Auditors select major programs using a risk-based approach and test them against compliance requirements such as allowable costs, eligibility, reporting, and subrecipient monitoring. The cost principles behind those tests are the same ones we cover in our 2 CFR 200 basics guide.
The compliance requirements auditors test
Under the Uniform Guidance, auditors evaluate a defined set of compliance areas for each major program. The most commonly tested include:
- Allowable costs and cost principles. Were charges allowable, allocable, and reasonable?
- Cash management. Did drawdowns track actual needs, or did you hold excess federal cash?
- Eligibility. Did funds reach only eligible beneficiaries or activities?
- Reporting. Were the Federal Financial Report and performance reports accurate and timely?
- Subrecipient monitoring. Did you oversee any organizations you passed funds to?
- Procurement. Did purchasing follow the written standards in 2 CFR 200?
Each of these maps to a record your team should already keep. The accuracy of your filed reports matters here too; auditors cross-check them, so the discipline behind solid grant reporting requirements pays off directly at audit time.
Preparing all year so the audit is routine
The organizations that breeze through a single audit do the same unglamorous things every month:
- Reconcile drawdowns to the ledger so cash management never raises a flag.
- Keep time-and-effort certifications current for staff charged to awards.
- Document cost allocations with a method an outsider can follow.
- Maintain a subrecipient monitoring file for every pass-through relationship.
- File accurate reports on time, including the RPPR and FFR where applicable, as covered in our RPPR and FFR explainer.
When these records exist contemporaneously, the audit is a sampling exercise. When they have to be rebuilt, every gap becomes a finding.
Understanding findings and corrective action
Not every single audit is clean, and a finding is not the end of the world, but it must be handled correctly. A finding documents a deficiency, such as an unallowable cost or a missing control. You respond with a corrective action plan that explains what happened, what you will fix, and by when.
Repeated findings, however, signal systemic weakness and can lead to a high-risk designation that adds monitoring or restricts future funding. The goal is not just to pass this year's audit but to retire findings so they never recur.
Single audit mistakes to avoid
The patterns that produce findings are predictable:
- Discovering the threshold late because federal expenditures were not tracked monthly.
- Weak segregation of duties, so the same person approves and records spending.
- Missing subrecipient monitoring documentation.
- Holding excess federal cash between drawdown and disbursement.
- Reconstructing records after the fact instead of keeping them as you go.
A single audit rewards the organization that managed its awards well all year. Build the controls early, and the audit confirms what you already know. If your team is scaling federal funding and approaching the threshold, our federal grant writing services and management support help you build award structures that stay audit-ready from day one.
