Single Audit Requirements for Federal Awards: Thresholds, Major Programs and the SEFA

Single audit requirements for federal awards apply to any state, local government, tribe, college or nonprofit that expends $1,000,000 or more in federal awards during a fiscal year that began on or after October 1, 2024. Below that line the entity is exempt from the federal audit requirement for the year. Fiscal years that began before October 1, 2024 remain on the old $750,000 trigger.

The rules sit in Subpart F of 2 CFR 200, often called the Uniform Guidance. Meeting the single audit requirements means a combined audit of the financial statements and of compliance for the largest or riskiest federal programs, performed under government auditing standards and filed with the Federal Audit Clearinghouse.

Who Must Meet Single Audit Requirements for Federal Awards in 2026

The test in 2 CFR 200.501 is based on federal awards expended during the entity's own fiscal year. The rule reads that a non-Federal entity "that expends $1,000,000 or more during the non-Federal entity's fiscal year in Federal awards must have a single or program-specific audit." An entity that expends less is exempt for that year, although its records must remain available to the awarding agency, the pass-through entity and the Government Accountability Office.

The Federal Audit Clearinghouse states the transition plainly in its submission guide: "$750,000 or more for Fiscal Years starting before October 1, 2024" and "$1,000,000 or more for Fiscal Years starting on or after October 1, 2024."

Three points about the threshold cause frequent confusion:

• Expended means activity. Under 2 CFR 200.502, an award is expended when the related activity occurs, such as incurring allowable costs, paying subrecipients, receiving federal property or using loan proceeds. A $3 million, three-year award with $800,000 of spending in the current year counts as $800,000.
• Subrecipient money counts. Funds received from a state or county that passes federal money through are federal awards, and they belong on the schedule alongside direct awards.
• Contractor payments do not count. Payments received for goods or services provided as a contractor under a federal award fall outside Subpart F.

Nonprofits that track grants in a fund accounting system for nonprofits can usually run this test from the general ledger, provided every federal award has its own fund or class code and the Assistance Listing number is recorded at setup.

Single Audit or Program-Specific Audit

A single audit is the default. 2 CFR 200.501(c) allows a program-specific audit instead when two conditions are both met: the entity expends federal awards under only one federal program (excluding research and development), and that program's statutes, regulations or award terms do not require a financial statement audit of the entity. A separate election exists for research and development, which requires all R&D awards to come from the same federal agency (or the same agency and pass-through entity) and advance approval of the program-specific audit.

Under 2 CFR 200.507, when a program-specific audit guide exists, the auditor follows that guide together with government auditing standards. When no current guide exists, the auditee must still prepare program financial statements with a SEFA, a summary schedule of prior audit findings and a corrective action plan.

What the Audit Covers Under 2 CFR 200 Audit Requirements

The 2 CFR 200 audit requirements in section 200.514 require the work to follow Generally Accepted Government Auditing Standards (GAGAS), the GAO's Yellow Book. The scope has four parts:

1. An opinion on whether the financial statements are fairly presented under GAAP or an allowed special purpose framework, the same core work as a standard engagement described in our comparison of audit, review and compilation.
2. An in-relation-to opinion on whether the SEFA is fairly stated in relation to the financial statements as a whole.
3. An understanding and testing of internal control over compliance for each major program.
4. An opinion on compliance for each major program.

GAGAS builds on GAAS standards for the financial statement work. The GAO describes the Yellow Book as the standard that "auditors of government entities and entities that receive government awards" use, and the 2024 Yellow Book is effective for financial audits for periods beginning on or after December 15, 2025. Our separate guide to Yellow Book audit standards covers independence and GAGAS reporting rules.

Regulated lenders follow separate rules, covered in our guide to credit union audit requirements.

Major Program Determination and the Type A/B Threshold

Auditors do not test every federal program. Section 200.518 sets a four-step, risk-based process for choosing major programs.

Step one: label Type A and Type B programs. The Type A threshold depends on total federal awards expended:

Programs above the threshold are Type A. Everything else is Type B. Before the 2024 revisions, the bottom tier used a $750,000 threshold and ran up to $25 million.

Step two: find low-risk Type A programs. A Type A program can be low-risk only if it was audited as a major program in at least one of the two most recent audit periods and, in the most recent period, had no material weakness in internal control over compliance, no modified opinion and no known or likely questioned costs above 5 percent of its expenditures. A first-time auditee has no low-risk Type A programs.

Step three: assess Type B programs. The auditor only has to risk-assess Type B programs that exceed 25 percent of the Type A threshold, which is $250,000 when the threshold is $1,000,000. The number of high-risk Type B programs the auditor must identify is capped at one-fourth of the number of low-risk Type A programs.

Step four: apply the percentage of coverage rule. Major programs must cover at least 40 percent of total federal awards expended, or 20 percent if the entity qualifies as a low-risk auditee under 200.520. Under 200.520, low-risk status requires, for each of the two preceding audit periods, annual single audits filed with the FAC on time, unmodified opinions on the financial statements and the SEFA, no material weaknesses under GAGAS, no going concern doubt and no serious findings on any Type A program.

Understanding materiality and audit risk helps finance teams see why the auditor focuses where it does.

The Compliance Supplement in 2026

The Compliance Supplement, published by OMB as Appendix XI to 2 CFR 200, tells auditors which compliance requirements to test for each listed program. Part 1 of the 2025 edition explains that "the Supplement is a document that identifies existing compliance requirements that the federal government expects to be considered as part of an audit."

As of late October 2026, the newest edition on OMB's Compliance Supplement page is the "2025 Compliance Supplement (November 2025)." OMB's Federal Register notice for that edition says it "applies to fiscal year audits that cover any period beginning after June 30, 2024" and invited comments to inform the 2026 Compliance Supplement. OMB has shared a draft 2026 Supplement with the AICPA's Governmental Audit Quality Center for audit planning, but the AICPA reports that OMB "has not yet issued the final 2026 Supplement" and has given no issuance date. Teams should plan fiscal 2026 engagements from the draft and confirm against the final edition.

Separately, OMB published a proposed revision of the federal financial assistance rules on May 29, 2026, with comments due July 13, 2026. The proposal would revise 200.503 so that agencies may impose additional audits only when a statute authorizes them, and it makes PII wording changes in 200.512. It does not change the $1,000,000 threshold. The proposal would also drop the words "annually updated" from the definition of the Compliance Supplement, and OMB states it is "reevaluating the appropriate frequency for issuing the compliance supplement." As of late October 2026 no final rule had been published.

Auditee Responsibilities and the Schedule of Expenditures of Federal Awards

Section 200.508 gives the auditee four duties:

• arrange the audit, following the procurement standards when selecting the auditor, and make sure it is performed and submitted on time;
• prepare the financial statements and the SEFA;
• follow up and take corrective action on findings, including a summary schedule of prior audit findings and a corrective action plan;
• give the auditor access to personnel, records and supporting documentation.

The SEFA is the auditee's document, prepared by management. Under 2 CFR 200.510, it must list individual federal programs by federal agency with Assistance Listing numbers, show cluster totals, name each pass-through entity and its award number, show expenditures and subrecipient amounts for each program, and include notes on accounting policies and on whether the entity elected the de minimis indirect cost rate of up to 15 percent.

The SEFA should reconcile to grant revenue and expense in the audited statements. Organizations that already prepare a statement of functional expenses have most of the cost data in place.

Worked SEFA Example (Illustrative)

Riverbend Family Services is an illustrative nonprofit with a fiscal year of July 1, 2025 to June 30, 2026. That year began after October 1, 2024, so the $1,000,000 threshold applies. This is its first single audit.

How the auditor would apply the rules (illustrative):

1. Threshold. $4,200,000 is above $1,000,000, so a single audit is required.
2. Type A threshold. Total expenditures fall in the $1,000,000 to $34 million band, so the Type A threshold is $1,000,000. Head Start ($2,150,000) is Type A. The other three programs are Type B.
3. Low-risk Type A. Head Start has never been audited as a major program, so it is not low-risk and becomes a major program.
4. Type B risk assessment. All three Type B programs exceed $250,000 (25 percent of $1,000,000), so they are eligible for assessment. With zero low-risk Type A programs, the auditor is not required to identify any high-risk Type B program, though professional judgment may still add one.
5. Coverage. Riverbend is not a low-risk auditee, so major programs must cover 40 percent of $4,200,000, which is $1,680,000. Head Start alone covers $2,150,000, or 51.2 percent. The rule is satisfied with one major program.

Under the pre-2024 table, the Type A threshold for this entity would have been $750,000, so CDBG ($910,000) would also have been Type A and, as a first-time program, a major program. Coverage would have been $3,060,000, or 72.9 percent. The higher threshold reduced the minimum testing in this example from two programs to one.

FAC Submission Deadline: 30 Days or Nine Months

Under 2 CFR 200.512, the audit, the data collection form and the reporting package "must be submitted within 30 calendar days after the auditee receives the auditor's report(s) or nine months after the end of the audit period (whichever is earlier)." If the due date falls on a weekend or federal holiday, it moves to the next business day.

For Riverbend, nine months after June 30, 2026 is March 31, 2027. If the auditor delivers the report on December 15, 2026, the 30-day clock ends January 14, 2027, which is the earlier date and therefore the deadline.

The FAC submission guide notes that the auditee will "upload a PDF of your audit reporting package" and "submit the SF-SAC as a series of XLSX workbooks." Timely filing in the two preceding years is also a condition for low-risk auditee status.

Preparing for Your First Single Audit

Most first-year problems start in the books. A practical sequence:

• Map every federal award to its Assistance Listing number, pass-through entity and award number at the start of the year.
• Record federal expenditures by award, with subrecipient payments coded separately.
• Document the controls over allowable costs, eligibility, reporting and subrecipient monitoring, then test them before the auditor does, using an approach like the one in our guide to internal controls testing.
• Draft the SEFA and reconcile it to the trial balance before fieldwork.
• Build the document list early with a PBC request list for first-time audits.

CPA firms with growing single audit practices often add capacity for SEFA tie-outs, control documentation and compliance sampling through outsourced audit support, while keeping the opinion work and sign-off with the engagement team.

Frequently Asked Questions

What is the single audit threshold for 2026? For fiscal years beginning on or after October 1, 2024, the threshold is $1,000,000 of federal awards expended in the year. Fiscal years that began before October 1, 2024 used $750,000.

Do grants received as a subrecipient count toward the threshold? Yes. Federal money passed through a state, county or other pass-through entity counts as federal awards expended. Payments received as a contractor for goods or services do not.

When can an organization choose a program-specific audit? When it expends federal awards under only one federal program (excluding R&D) and that program does not require a financial statement audit of the entity. R&D has a separate election.

Who prepares the schedule of expenditures of federal awards? The auditee's management prepares the SEFA. The auditor gives an opinion on whether it is fairly stated in relation to the financial statements as a whole, so the schedule must be ready and reconciled before fieldwork.

When is the single audit due to the Federal Audit Clearinghouse? The earlier of 30 calendar days after the auditee receives the auditor's report or nine months after the fiscal year end. A December 31, 2026 year end has an outside date of September 30, 2027.

Has the 2026 Compliance Supplement been released? Not in final form as of late October 2026. OMB's page still lists the 2025 edition as the newest, and a draft 2026 edition has been shared with auditors for planning.

Next Step

Madras Accountancy supports nonprofits, local governments and CPA firms with grant bookkeeping, SEFA preparation, reconciliations and audit support workpapers ahead of single audit fieldwork. To discuss your federal award records or your firm's audit season, contact our team.