What Is a Single Audit?

In this episode of THE SAMPLE, Leita Hart-Fanta, CPA answers the question, “What is a Single Audit?”

Welcome to The Sample, a quick discussion of auditing concepts and terms that will help you do your work. Conducting an audit in accordance with auditing standards is no small feat and I want to support you. We’ll be referring to the GAO, IIA and AICPA literature to bolster our conversations. Let’s get started.

Transcript

In this episode, we answer the question, “What is a single audit?”

The term single is misleading

Now, that word single is a little misleading because a single audit is actually made up of multiple audit objectives, as I will tell you in just a minute. It also got a participant in one of my classes in some trouble because his wife looked at his calendar and saw that he was going to a class that day for single auditors. She thought he was stepping out on her.

So the name is a little wonky.

But what it’s regarding, what the Single Audit is about, is auditing non-federal entities that receive federal money, who spend federal money. So the feds send this money out to achieve their purposes, and they want to make sure these non-federal entities are actually spending the money according to the grantor’s expectation. So non-federal entities could be something like a state or a local government, like a city or a school district. It could be a not-for-profit, could be a commercial entity; it could be a university, could be a lot of different entities that spend federal money.

If an entity spends more than $750,000 in federal funds a year, then they trigger the requirements of the Single Audit.

The Single Audit is several audits in one

Now, the Single Audit is actually two audits in one. It’s an audit to determine whether the financial statements are accurate and true. So the federal grantor is going to review the financial statements and make sure that the entities are spending the money properly.

It’s also an audit to make sure that the entity is complying with significant grant terms and conditions.

And then there’s a bridge document called the SEFA, the Schedule of Expenditures of Federal Awards, which lists all the grants that the nonfederal entity expended from and the amount that was expended. That’s a very helpful kind of bridge document that’s in the financials, but also ties to the compliance piece. So it’s a very important piece.

From that, SEFA, I was able to see that my local school district spent money under 30 different federal awards. And that these 30 awards were coming from about five different federal grantors.

One audit to make the grant community happy

So imagine you’re the school district and you get audited by each of those grantors, and you get audited by the state who passed somebody down to you too, and you get it audited by your CPA who’s looking at your financial statements. It’s enough to make you cry mercy.

And that’s exactly what the non-federal entities did back in the 80s. They said, “Look, can we just get one audit done a year that would make the grant community happy?” So Congress said, “That makes sense,” and passed the Single Audit Act, which created one single audit.  The Single Audit was designed to make the grant community happy. It does everything they need. They need the financial information. They need the compliance information. They need to be able to trace their grants and where they went and how much was expended, and that’s the job of the SEFA.

For more info…

To learn more about the Single Audit, check out the Uniform Guidance, Section F specifically, that’s where the Single Audit requirements live. Also look at the Federal Audit Clearinghouse, which is a repository for all the single audits conducted. So you can look up your school district (just look up their name, click on the link and the whole audit report will come up for you to examine and enjoy).

That wraps it up for another episode of The Sample. True to the nature of a sample, we didn’t talk about everything, so you’ve probably got questions. Write to me leita@yellowbook-cpe.com and I’ll do my best to fill in the blanks. Thanks for playing.

For More Info at YellowBook-CPE:

Single Audit Bundle

Single Audit Primer – Video Course

Audit Requirements for Federal Grants – Self-Study E-Book