Nonprofit organizations have financial responsibilities to donors, lenders, and the public. And, if they receive $750,000 or more in federal funding, they must meet single audit requirements (formerly known as the A133 audit) to stay in good standing.
While single audits have evolved from the requirements of a133 audit standards, some things have remained the same. We’ll discuss these changes and how you can better prepare for your next federal audit.
What Was an A133 Audit?
In accordance with the Single Audit Act of 1984 and OMB Circular A-133, non-federal entities, such as non-profit organizations, government entities, and educational institutions, that expended more than $500,000 in federal funding needed to undergo a single audit, known at the time as the A133 audit.
If your entity met the criteria of the audit requirements, you were required to contact a third-party independent auditor or certified public accountant to conduct an examination and analysis of your finances and reports. Once your audit was completed, you would submit your report to the Federal Audit Clearinghouse.
These audits ensured that non-federal entities were not mishandling federal funds. The problem with A133 audits is that they would create a lot of paperwork. Each federal program needed various reports, which resulted in a lot of time, money, and effort for independent auditors and the auditee.
What is a Single Audit?
2014 brought changes to the A133 audit. With the issuance of Uniform Guidance, some of the audit requirements changed. For example, non-profit organizations that receive $750,000 or more in federal funds must undergo an audit. (In the past, the threshold was $500,000.)
A federal single audit, also known as a Uniform Guidance single audit, produces one comprehensive report instead of multiple reports for each federal program, like the A133 audit.
Even still, an auditor must conduct a single audit under generally accepted accounting principles (GAAP).
Preparing for Your Single Audit
During your federal single audit, your audit team will examine your financial reports to determine if you comply with federal and state regulations. Having a few items and documents prepared for review is helpful in preparing for your OMB single audit. Those things include:
- Financial statements, including your balance sheet, cash flow statement, and income and expense reports
- Internal controls documentation, which outlines your policies and procedures to ensure your financial reporting is accurate
- Grant agreements and contracts detailing the terms and conditions of your funding sources
- Supporting documentation for all expenses, such as invoices, receipts, and payroll records
- Compliance documentation, including evidence of adherence to federal and state regulations
- A schedule of expenditures of federal awards (SEFA), which summarizes the federal funds received and expended during the audit period
With access to these documents, your independent auditor can audit your practices and issue their opinion of your compliance with federal and state regulations.
Completing Your Single Audit with Assurance Dimensions
If your organization accepts more than $750,000 in federal funding in a single year, you will most likely need a single audit. A single audit is a holistic review of your organization to ensure compliance with all federal and state programs. Unlike previous A133 audits, a single audit is more cost-efficient and comprehensive.
To ensure you meet all single audit requirements, consider partnering with an experienced audit team to conduct it. At Assurance Dimensions, we have over 75 years of industry experience and are committed to providing you with a personalized audit engagement. Contact us today to learn more about our audit and assurance services.
