For nonprofit executives and grant managers, year-end is rarely a quiet period. But for organizations receiving federal awards, preparing for single audits carries an additional responsibility: confirming that federal grant audit requirements are understood, documentation is complete, and the organization is ready for what comes next.
Key Takeaways
- Single Audit requirements are triggered by dollars spent. Organizations should recalculate total federal expenditures before year-end closes.
- The SEFA should be drafted and reconciled early, before fieldwork begins, to avoid delays in major program determination and audit planning.
- Documentation gaps and lack of documented policies are the most common source of audit findings. Policies and processes alone don’t satisfy auditors. Policies related to conflict of interest and procurement must be in writing and conform to Uniform
- Guidance requirements. Organizations also need evidence that those policies were followed.
- Prior findings require documented follow-up, including what changed, who owns the process, and what support exists to demonstrate the correction.
Why Review Federal Grant Audit Readiness Before Year-End?
Year-end is the last window to catch problems before they become audit delays or findings. The time before close is the right moment to confirm whether grant records are complete, compliance support is in place, and any unresolved prior findings have been addressed.
Waiting until the auditor is onsite to discover a gap in procurement files or subrecipient monitoring records creates pressure that’s hard to recover from.
Did Federal Award Activity Change This Year?
Under 2 CFR Part 200, a non-federal entity that expends $1,000,000 or more in federal awards during its fiscal year is required to have a Single Audit or program-specific audit.
Before year-end, organizations should recalculate total federal expenditures and account for any accruals as well as any changes, including new awards, pass-through funding, non-cash assistance, or changes in award periods and Assistance Listing Numbers. If the calculation is close to the threshold, confirm it before close.
Is the SEFA Ready for Auditor Review?
The Schedule of Expenditures of Federal Awards (“SEFA”) should be drafted, reviewed, and reconciled to the general ledger before fieldwork begins. Each award listed should reflect:
- The correct federal agency
- The appropriate pass-through entity
- Assistance Listing Number
- Program name
- Award period
- Expenditures
- Amount passed through to subrecipient, if any
Errors or omissions in the SEFA affect audit planning and major program determination, which can ripple through the rest of the engagement.
Where Do Grant Compliance Issues Usually Surface?
The risk areas for federal grants that most commonly produce findings are also the ones most likely to have incomplete documentation at year-end. Before close, review:
- Allowable costs: invoices, approvals, and allocation rationale
- Payroll and time-and-effort: timesheets and certification records aligned to federal awards
- Procurement: files that show the process was followed, not just the outcome
- Cash management and reporting: drawdown timing and federal financial reports
- Subrecipient monitoring: documentation of risk assessments, site visits, or desk reviews
- Period of performance: charges falling within approved award dates
The standard is evidence. Auditors are looking for documentation that shows policies were actually followed, not just written down.
Are Prior Findings Fully Resolved?
As Bennie J. Lewis, CPA, President & Partner at Assurance Dimensions, explains: “Federal grant audits tend to go more smoothly when organizations use year-end to review what changed, what still needs support, and what prior findings need follow-up. The goal is not just to get through the audit — it’s to make sure the organization can show how federal funds were tracked, approved, and monitored throughout the year.”
For organizations that have already been through a single audit, prior findings deserve focused attention before year-end. If the issue was corrected, the organization should be able to show what changed, who owns the process now, and what documentation supports the correction. Repeat findings draw heightened scrutiny and can affect program risk classifications in subsequent audits.
How Assurance Dimensions Supports the Single Audit Process
At Assurance Dimensions, we perform numerous single audits annually for nonprofit organizations and other recipients of federal awards. Our approach includes practical communication, senior-level support, and remote auditing capabilities designed to reduce disruption for finance and grant management teams.
If your organization is approaching year-end with significant federal award activity or unresolved prior findings, contact Assurance Dimensions to discuss your federal single audit needs.