Do You Need A Uniform Guidance Audit?

As a nonprofit organization receiving Federal financial assistance, you may find yourself asking, “Do I need a Uniform Guidance Audit?” No matter the size of your nonprofit, if you’re receiving federal aid, you may be subject to uniform guidance audits, also called single audits, to stay in government compliance. In this article, we aim to clarify what these audits require and answer if your nonprofit organization needs one.

What is a Uniform Guidance Audit?

The US Office of Management and Budget (OMB) established the Uniform Guidance with the intent to streamline and standardize administrative practices and financial management of Federal awards to nonprofit organizations. In essence, it ensures the proper use, management, compliance, and accountability of Federal funds to prevent fraud and maintain the integrity of funded projects or programs.

How do nonprofit organizations show that Federal funds are used properly?

So, how do you prove that your nonprofit organization is responsibly handling the Federal awards it receives? The answer lies in obtaining a Uniform Guidance audit, often performed by an external CPA auditor.

Criteria for A Uniform Guidance Audit

To determine whether your nonprofit is required to go through a Uniform Guidance audit, we need to look at the Federal award thresholds.

If the threshold exceeds the amount of $750,000 or more during the fiscal year, then nonprofits generally become subject to a single audit.

Be Aware: Federal funding and awards are often distributed through various federal or local government agencies. It’s not always clear that the aid you receive is Federal funding. However, all Federal funds must follow any compliance regulations attached to the awards received, which is why working with a CPA firm with nonprofit expertise is essential. If you need more details on single audit requirements and how they relate directly to your organization, reach out to your audit team for more information.

Prep Work and Audit Expectations

The first step is hiring a qualified accounting firm or independent auditor with nonprofit auditing expertise. Due to the specialized nature of single audits, CPAs must have the background and education required by the Government Accounting Standards (GAS). Qualifications and expertise include knowledge of the Generally Accepted Accounting Principles (GAAP) and the OMB uniform guidance guidelines.

During the audit process, auditors need certain documents from your organization, including financial statements, records, and support documents of all Federal awards and grants you received. The auditors will examine all documents for accuracy, compliance, and internal controls during the audit process. They’ll also search for any records showing mismanagement or misuse of the funds. At the end of the audit process, you will receive the audit report with the findings, opinions, and recommendations from the auditor.

What Happens After Your Audit?

If your audit report includes non-compliance issues or deficiencies, you must take corrective actions to avoid repercussions. These corrective actions can include implementing new procedures, adjusting financial practices, or repaying any misspent funds.

Hire a Qualified CPA Auditor

At Assurance Dimensions, we understand that Federal funding and government grants require a higher level of transparency and accountability for nonprofit organizations. We have a proven track record and expertise to conduct your uniform guidance audit with care and accuracy.