Avoiding Single Audit findings in federal subrecipient awards

Who needs a Single Audit now

Under 2 CFR 200.501, a non-federal entity that expends $1,000,000 or more in federal awards during a fiscal year beginning on or after October 1, 2024 must have a Single Audit. The previous threshold was $750,000. Expenditures count whether the money came directly from a federal agency or through a pass-through entity such as a state department of health or a workforce board. For many organizations, the first fiscal year under the new threshold is being audited now.

The audit package, including the auditor's reports and the data collection form, goes to the Federal Audit Clearinghouse at FAC.gov. Under 200.512 it is due the earlier of 30 calendar days after you receive the auditor's report or nine months after the end of the audit period. Findings are public. Funders, including foundations, look them up, and a pattern of repeat findings can affect future awards through the federal risk review under 200.206.

How auditors choose what to test

Auditors do not test every federal program equally. They identify major programs using a risk-based process in Subpart F and test compliance requirements listed in the OMB Compliance Supplement. The Supplement organizes requirements into lettered categories such as activities allowed or unallowed, allowable costs, cash management, eligibility, equipment, matching, period of performance, procurement and suspension and debarment, reporting, and subrecipient monitoring. For each program it identifies which requirements are subject to audit.

Read the Compliance Supplement section for each program you operate. It tells you exactly what your auditor will look at, and it is written for auditors, which makes it more specific than most agency guidance. Preparing for the audit is far easier when your program and finance staff know which requirements apply before the fieldwork letter arrives.

Allowable costs and time and effort

Findings on allowable costs often trace back to personnel charges. Under 200.430(i), charges for salaries and wages must be based on records that accurately reflect the work performed, supported by a system of internal control that provides reasonable assurance the charges are accurate, allowable and properly allocated. Budget estimates alone do not qualify. If a staff member is paid 40 percent from a federal award, you need records showing that roughly 40 percent of their actual work went to that award, reconciled periodically.

Other frequent issues include costs charged outside the period of performance, unallowable items such as alcohol or entertainment slipping into a reimbursement request, and costs that were not in the approved budget and required prior approval. A monthly review of general ledger detail by the program manager, signed and dated, catches most of these before they become findings.

• Time and effort records signed by the employee and supervisor
• Monthly reconciliation of payroll charges to actual effort
• Prior approval requests filed before, not after, budget changes
• A documented review of each drawdown against the general ledger

Procurement under 200.317 to 200.327

Procurement findings are common because many nonprofits have purchasing habits, not written procedures. The Uniform Guidance requires written procurement standards, written conflict of interest standards, and documentation of each procurement's history. The Uniform Guidance ties the micro-purchase and simplified acquisition thresholds to the FAR, and the FAR's October 1, 2025 inflation adjustment raised them to $15,000 and $350,000. Purchases above the micro-purchase level need price or rate quotations from an adequate number of qualified sources. Above the simplified acquisition threshold, you need formal methods and a cost or price analysis. If your written policy still says $10,000 and $250,000, you are following stricter limits than required, which is allowed, but make sure staff know which numbers your policy actually uses.

Before entering into covered transactions, check that the vendor or subrecipient is not suspended or debarred. Print or save the SAM.gov exclusion search result with a date and keep it in the procurement file. Auditors routinely ask for this, and a missing check is a finding even if the vendor was never excluded.

Subrecipient monitoring is where pass-throughs get caught

If your organization passes federal funds to partners, 200.332 places specific duties on you. You must determine whether each agreement is a subaward or a contract, include the required federal award information in each subaward, evaluate each subrecipient's risk of noncompliance before award, monitor activities in a way that matches that risk, and follow up on deficiencies. You must also verify that subrecipients who meet the threshold have their own Single Audit, and issue management decisions on findings that relate to your subawards.

The most common failure is a missing pre-award risk assessment. A one-page form that reviews the subrecipient's prior audit results, financial systems, staff experience and past performance, scored and filed before the subaward is signed, satisfies the core of the requirement. Subaward reporting matters too. Since FSRS.gov was retired in March 2025, FFATA subaward reports of $30,000 or more are filed in SAM.gov, generally by the end of the month after the month the subaward was made.

When a finding happens anyway

Findings are not the end of the world, but repeat findings signal a control problem. Under 200.511, the auditee prepares a corrective action plan and a summary schedule of prior audit findings. Write the corrective action plan as if a federal grants officer will read it, because one will. Name a responsible person, a specific control change and a completion date.

ELIXIR CONSUMERS' post-award workspace keeps each award's terms, reporting dates and subrecipient files together, so the documents your auditor requests are already linked to the award they belong to. The habits matter more than any system: written procedures, records that reflect reality, a risk assessment before every subaward, and a corrective action plan with a name and a date on it.