We’ve been waiting a while for this, as single audit reform has been an ongoing conversation for a few years. There will be a number of changes to single audit requirements as well as some changes to the single audit process. For now, since these changes won’t take effect until 2015 calendar year-end audits, the changes to the single audit requirements will be addressed here, and the process changes will be summarized in a later blog post.
First, the single audit threshold will increase from $500,000 to $750,000; so, if your organization’s federal expenditures are between these two figures, you will no longer need to have an audit.
Additional changes are being made in determining major programs:
- The minimum threshold will increase to $750,000 in determining type A/B programs.
- Significant deficiencies in a prior year will no longer preclude type A programs from being considered low risk.
- The number of type B programs required to be tested as major will reduce.
- The percentage of coverage will decrease from 50% and 25% to 40% and 20% for non-low-risk auditees and low-risk auditees, respectively.
The threshold for reporting questioned costs will also increase from $10,000 to $25,000. Additionally, all expenditures of federal awards will be required to be reported on the face of the SEFA, including noncash assistance and loan program balances and activity.
There are numerous other changes included in the reform, though the brief summary above is a good start for you to consider in how it will affect your organization. We will be keeping you informed of other changes throughout the year, more specifically towards the end of the year, so you know what to expect.
By Bobby Mikkelsen, CPA