Single audits are designed to be a cost-effective way of determining whether federal grant money is being properly expended. It is up to the entity to establish and maintain a system of controls that will give reasonable assurance that the grant is being spent within the laws, regulations and specific conditions of the grant. If $750,000 of federal awards is expended within a fiscal year, you can expect a single audit in addition to the financial statement audit. This includes if the recipient of federal dollars is a pass-through entity and is expending money to sub-recipients. It is the entity’s responsibility to monitor the sub-recipient and ensure they meet the requirements of the OMB Uniform Guidance as well as the specific requirements of the grant.
An important step in becoming ready for a single audit is to properly prepare the Schedule of Expenditures of Federal Awards, or SEFA. This schedule summarizes the grants received and how much was expended throughout the fiscal year. To increase your audit efficiencies, it is important to use the correct CFDA (Catalog of Federal Domestic Assistance) numbers, which indicates the federal agency and funding program for the grant. Some of these CFDA numbers are required to be clustered, or grouped, together on the SEFA, and the correct program title can be found here.
The last part of your SEFA is determining the amount of expenditures associated with each grant. This is important as it helps the auditor determine which grants are major and, therefore, need to be tested. Also, you will need to provide the auditor with a schedule detailing what general ledger accounts make up the amounts on the SEFA. This is crucial as they will need to know which accounts to sample from for testing.
To learn more about cost principles for single audits, click here.
We at Henry+Horne pride ourselves on our experience and proficiency in government audit services. If you have any audit-related questions, feel free to contact one of Henry+Horne’s many government audit professionals.
Andrew Gill, CPA