Government funding is a critical financial resource for nonprofits to improve the lives of their constituents and promote their mission. However, federal aid comes with distinct compliance and nonprofit accounting requirements. If your nonprofit receives government funding, you may be required to submit to a single audit. Single audits are different from standard financial audits, and in this article, we’ll explain what a single audit is and what your organization can expect from one.
How Is a Single Audit Different From a Standard Nonprofit Audit?
A single audit is a financial statement and federal awards audit of your entire organization. Compared to standard nonprofit audits, a single audit is substantially more detailed and requires a higher level of examination by the auditor. The purpose of a single audit is to provide assurance that your organization has spent federal funds in compliance with the programs awarding them.
Accepting Government Funds Comes With Red Tape
If your organization is a non-federal entity and received $750,000 or more in federal funds in a single fiscal year, your organization is most likely required to have a single audit. Be aware that federal funding rarely travels directly to a nonprofit and is often distributed through states, local governments, and other entities before being received by an organization. As such, single audits can be complicated, so it’s critical that you hire independent nonprofit auditors specializing in single audits.
Who Can Perform a Single Audit?
Independent auditors, generally certified public accountants (CPAs), perform single audits. Due to the specialized nature of these types of audits, CPAs performing them must have the education and background required by Government Auditing Standards (GAS).
What To Expect During Your Single Audit
A single audit begins much like a standard financial audit: the independent auditors review records for your entire organization to ensure financial statements are accurate and proper controls are in place. Auditors dive deep into your organization to ensure that the government funds you were awarded were spent in compliance with the guidelines of each award. When reviewing your organization, your auditor uses Uniform Guidance outlining how the audit will be conducted and what materials will be reviewed.
Nonprofit Accounting: What Do You Do Now?
If your organization requires a single audit, it’s essential to be prepared. This means reviewing government auditing regulations, getting financial records ready, and hiring a qualified CPA. Noncompliance with federal awards or lack of proper internal controls can lead to dire consequences for your organization.
Rest Assured
At Assurance Dimensions, we understand that government funding requires a higher level of transparency and accountability for nonprofit organizations. We have the proven track record and expertise to conduct your single audit with care and accuracy.
If you need a single audit, Assurance Dimensions can help. Contact us today to learn about our nonprofit accounting audits.
