Dear Clients and Friends,

Happy 2021! The New Year brings plenty of opportunities and challenges for not-for-profit organizations as we continue to navigate the “new normal”. Resources, COVID-19 relief funding, employee retention credits, audit and reporting requirements, and guidance for working remotely or returning to work are the focus of our daily conversations.

Our winter newsletter covers one of those key topics that we have been discussing lately: COVID-19 relief funding and Single Audit requirements. Addressing the key points of the Single Audit requirements and process, Brianna Connelly, a Senior Auditor on our Not-for-Profit Industry Team, provides a great overview.

If you have questions regarding the Single Audit requirements or if you have a topic for a future newsletter, please reach out to me or to any member of Kreischer Miller’s Not-for-Profit Industry Team.

Stay safe and well!

Elizabeth Pilacik, Director, Audit & Accounting and Not-for-Profit Specialist

Will COVID-19 Relief Funding Trigger a Single Audit for Your Organization?

Federal funding is often subject to a compliance audit in the form of a Single Audit. The pandemic has brought an increase in federal funding related to COVID-19 relief, which means that more not-for-profits will be required to have a Single Audit in accordance with Uniform Guidance.

A Single Audit is required when an organization expends $750,000 or more in either direct or indirect federal awards overall, and provides assurance to the federal government as to whether or not the organization is in compliance with federal statutes and regulations.

Organizations that expend federal funding are required to report these expenditures on the Schedule of Expenditures of Federal Awards (SEFA).  The SEFA is a supplemental schedule to the financial statements.  The expenditures information is detailed by program using the applicable Catalog of Federal Domestic Assistance (CFDA) number. The auditor issues an opinion as to whether the SEFA is fairly stated in all material respects in relation to the financial statements as a whole.

A Single Audit encompasses both a financial statement audit and a federal awards audit. The financial statement audit covers the operations of the organization and the auditor provides an opinion on whether the financial statements are presented fairly. A federal awards audit is compliance driven and includes tests of internal control over compliance and tests of compliance.  Additionally, the auditor provides an opinion on compliance.

Testing of certain compliance requirements could involve testing the allowability of expenditures, cash management, eligibility requirements, or the period of performance for those expenditures.  Testing the internal controls over compliance involves testing the review and approval processes implemented by the organization to ensure that key compliance requirements of the federal program are met.

The compliance requirements under Uniform Guidance are outlined in the Office of Management and Budget (OMB) Compliance Supplement that is updated annually. In December 2020, the OMB issued an addendum to the 2020 OMB Compliance Supplement to provide additional guidance for programs with COVID-19 relief funding. While it appears that the Paycheck Protection Program (PPP) loans are not subject to Single Audit under Uniform Guidance, there are other COVID-19 awards that meet the requirements.  These awards have been funded through the Provider Relief Fund, the Coronavirus Relief Fund, and the Education Stabilization Fund.

The best way for an organization to prepare for a Single Audit is to talk with your auditors about what the process will be like and what supporting documentation you will need to provide. It is important to keep supporting documentation safe and readily available for the audit. If you are aware that your organization expended federal funding over the $750,000 threshold, reach out to your auditors to discuss next steps.


Information contained in this alert should not be construed as the rendering of specific accounting, tax, or other advice. Material may become outdated and anyone using this should research and update to ensure accuracy. In no event will the publisher be liable for any damages, direct, indirect, or consequential, claimed to result from use of the material contained in this alert. Readers are encouraged to consult with their advisors before making any decisions.