[1][2][3] Usually performed annually,[4] the Single Audit's objective is to provide assurance to the US federal government as to the management and use of such funds by recipients such as states, cities, universities, non-profit organizations, and Indian Tribes.
The audit is typically performed by an independent certified public accountant (CPA) and encompasses both financial and compliance components.
[10] The Single Audit provides the Federal government with assurance that these recipients comply with such directives by having an independent external source (the CPA) report on such compliance.
However, it only applies to state, local government, and nonprofit recipients that expend $750,000 or more of such assistance in one year.
[11][12] A Single Audit encompasses an examination of a recipient's financial records, financial statements, federal award transactions and expenditures, the general management of its operations, internal control systems, and federal assistance it received during the audit period (the time period of recipient operations examined in the Single Audit, which is usually covers a natural or fiscal year).
The compliance component of a Single Audit covers the study and understanding (planning stage) as well as the testing and evaluation (exam stage) of the recipient with respect to federal assistance usage, operations and compliance with laws and regulations.
This is because there are millions of federal grants awarded each year to thousands of recipients, each with its own independent way of operating.
Any recipient whose total federal expenditures during a year equal or exceed $750,000 requires a Single Audit.
Example 2: Using the same data in Example 1 with the exception that the City of Example now expended a total of $30,000,000 in federal assistance, the Section 8 program would meet the Type A threshold because $950,000 is greater than $30,000,000 x 3% ($900,000).
In assessing the risk of Type B programs, auditors should use professional judgement and criteria established in the Uniform Guidance.
Nevertheless, the auditor is required to perform enough procedures to form an opinion on whether the program (as a whole) complied with laws and regulations.
[24] Due to the amount of federal regulations, the federal government has provided certain guides and literature to assist the auditor in the examination, which includes the OMB Compliance Supplement and the Compliance requirements:[24] The OMB Compliance Supplement is a large and extensive guide created by the OMB for Single Audits, and is considered the most important tool of both the auditor and the recipient when performing, or being subject to, a Single Audit.
Without it, auditors would need to research thousands of laws and regulations for each single program of a recipient to determine which compliance requirements are important to the Federal Government.
After the Single Audit is concluded, the recipient prepares two documents: a "Data Collection Form" and a "Reporting Package".
[33] On March 19, 2020, the Office of Management and Budget issued a memo allowing certain extensions of deadlines because of the COVID-19 pandemic.
[36][37] The extension may be given automatically, but recipients should still retain documentation of how the pandemic reduced its operational capacity and how the award was affected.
[34][35] On June 18, 2020, the Office of Management and Budget issued a memo, stating that extensions are no longer allowed for organizations with 2020 year-ends because, "during the Coronavirus pandemic, many recipients learned the capabilities and are now getting the experience to perform the objectives of the Federal programs remotely with limited access to their physical office.
The auditor must establish audit objectives that determine whether the recipient complied with laws and regulations.
They must research the recipient's federal assistance awards and programs to determine applicability of specific laws and regulations.
They must understand the recipient, its organization, operations, internal control systems, and ability to responsibly manage federal assistance.
[3][39][40] As part of the Single Audit, the auditor must prepare and submit three individual reports to the recipient and to the federal government.
The third report is an opinion, or a disclaimer thereof, on the degree to which the recipient has complied with laws, regulations, and the terms and conditions of the federal assistance awards.