Navigating Single Audit Thresholds for Not-for-Profit Organizations
Written by: Kylie Thomas
For not-for-profit organizations (NFPs) that rely on federal funding, compliance with federal regulations is critical. Among these requirements, the single audit ensures proper oversight of federal funds. This article delves into the current single audit threshold, its historical changes, and the reasons behind these adjustments.
Balancing Oversight and Practicality
The single audit threshold aims to balance accountability for federal funds with practical considerations for NFPs. Changes to the threshold reflect efforts to adapt to economic conditions and streamline oversight. However, any increase comes with trade-offs, as fewer organizations fall under the requirement, potentially reducing the scrutiny of federal funds.
For NFPs, understanding the threshold’s implications is critical to maintaining compliance and ensuring continued eligibility for federal funding. As thresholds are continually adjusted by the Office of Management and Budget (OMB), staying informed will help organizations navigate these evolving requirements and focus on advancing their missions.
By balancing financial accountability with operational efficiency, the single audit threshold remains a cornerstone of effective federal funding oversight, ensuring resources are used as intended while supporting NFPs in their vital work.
A Look at the History of Changes
The single audit threshold has evolved over the years. Prior to the most recent threshold change in 2024, the single audit threshold was last updated in 2015. In 2015, the Office of Management and Budget (OMB) raised the threshold from $500,000 to $750,000 under the Uniform Guidance. This was the first update in over a decade, as the $500,000 benchmark had been in place since the early 2000s. Prior to that, the threshold was set at $300,000, reflecting a history of incremental increases to match economic and administrative realities. Most recently in 2024, the threshold has increased to $1,000,000.
Why Was the 2024 Threshold Increased to $1,000,000?
Several factors motivated the increase:
Inflation and Economic Changes
Inflation gradually diminishes the value of money, making the earlier $750,000 threshold less significant over time. The adjustment to $1,000,000 accounted for inflation and ensured the threshold continued to target organizations managing substantial federal resources.
Administrative Efficiency
Single audits are resource-intensive, both for the organizations being audited and for federal agencies conducting oversight. By raising the threshold, federal resources could be concentrated on larger grants, where potential risks and impacts are greater, while smaller organizations faced fewer compliance burdens.
Reducing Burden on Small Organizations The change also sought to ease the financial strain on smaller NFPs. For many organizations just above the previous $750,000 threshold, the cost of conducting a single audit was disproportionately high relative to their funding. By raising the threshold, these organizations could allocate more resources toward their programs and services.
What Does This Mean for Not-For-Profit Organizations Receiving Federal Funding?
The new single audit threshold was effective as of October 1, 2024. However, the threshold will likely not take effect right away for your organization. The $1,000,000 threshold will be applicable to fiscal periods beginning after October 1, 2024. The chart below can walk you through the process for determining what threshold applies to you at this time.
Leverage a Trusted Advisor
Don’t hesitate to reach out to us at CSH if we can help your not-for-profit organization navigate these waters. Determining if a single audit is necessary for the upcoming year is not always obvious and is one of the many ways that we can support your organization.
