Single Audit Act of 1996: What It Is and How to Prepare

The Single Audit Act of 1996 is a federal law designed to streamline the audit process for non-federal entities receiving substantial federal funds. Its purpose is to replace numerous, grant-specific audits with a single, comprehensive annual audit. This approach reduces the administrative burden on these organizations while still ensuring accountability for the use of federal money. The Act operates with the Office of Management and Budget’s (OMB) Uniform Guidance, which provides detailed audit requirements.

Determining the Need for a Single Audit

For fiscal years beginning on or after October 1, 2024, a non-federal entity must undergo a single audit if it expends $1,000,000 or more in federal awards during its fiscal year. This threshold, increased from the previous $750,000, triggers the audit requirement. A “federal award” includes grants, cooperative agreements, loans, loan guarantees, and non-cash assistance like food commodities or donated property.

The term “expended” refers to when the activity related to the federal award occurs, regardless of when cash is received or paid. For example, funds are expended when an organization incurs costs for a grant-funded project. This requirement applies broadly to entities such as state and local governments, tribal governments, non-profit organizations, and institutions of higher education that receive and expend federal financial assistance.

Auditee Preparation and Responsibilities

The auditee’s responsibility is the preparation of the Schedule of Expenditures of Federal Awards (SEFA). This document is a detailed summary of the organization’s spending of federal funds for its fiscal year and is a focus of the audit. The SEFA must list each federal program, the name of the federal agency, and the specific program title.

For each program on the SEFA, the auditee must include its Assistance Listing Number (ALN), which replaced the Catalog of Federal Domestic Assistance (CFDA) number. The schedule must also report the total funds expended for each federal program during the audit period.

The auditee is also responsible for preparing its complete annual financial statements. These statements may be prepared in accordance with generally accepted accounting principles (GAAP) or on another basis of accounting.

The organization must design and maintain effective internal controls over its federal programs. These policies and procedures provide reasonable assurance that the entity is managing federal awards in compliance with laws and regulations. The auditee must also comply with the terms of its grant agreements and follow up on prior audit findings by implementing a corrective action plan.

Components of the Audit and Reporting Package

The single audit results in a reporting package that includes the auditee’s financial statements and the Schedule of Expenditures of Federal Awards (SEFA). The package also contains several items from the independent auditor, including:

• An opinion on the financial statements and the SEFA.
• A report on internal control over financial reporting and compliance with relevant laws and regulations.
• A report on compliance for each major federal program and on the internal controls over that compliance.
• A schedule of findings and questioned costs, which identifies any instances of non-compliance, internal control deficiencies, or costs that may not be allowable.
• A summary schedule of prior audit findings to show the status of previous corrective actions.
• The auditee’s corrective action plan to address current audit findings.

Submitting the Final Audit Report

The auditee is responsible for submitting the completed reporting package to the Federal Audit Clearinghouse (FAC). The FAC is operated by the General Services Administration (GSA) and serves as the central repository for all single audit reports for the U.S. government.

The submission includes the Data Collection Form (Form SF-SAC) and the complete reporting package. Form SF-SAC summarizes information from the audit, including details about the auditee, the auditor, and a summary of the findings. This form allows federal agencies to quickly access the audit results.

The auditee must submit the package by the earlier of two dates: 30 calendar days after receiving the auditor’s report or nine months after the end of the organization’s fiscal year. The entire submission process is handled electronically through the GSA’s online portal, ensuring an efficient and standardized collection of audit data.