Here’s a Single Audit overview in five minutes. This video provides an overview of what a Single Audit is and what an auditor does in performing such an engagement.
First, understand that some entities receive multiple federal grants. Rather than performing an audit of each individual, the Uniform Guidance allows one audit (a Single Audit) based on risk. So, if a city receives seven federal grants in one year, an auditor can perform a single audit that addresses the riskier programs. The video explains how the auditor determines major programs, the riskier grants of the seven received. Those are the ones that will be audited.
The applicability of the Single Audit to a grantee is based on the entity’s federal expenditures. Audit the entity using the Uniform Guidance when more than $750,000 in federal funds are expended.
In the video, I also explain how auditors use the Compliance Supplement to audit federal programs. The Compliance Supplement provides a summary of the applicable compliance provisions for federal grants. You can locate a particular grant by searching the Compliance Supplement by its federal assistance listing number. For example, 14.321 is HUD’s Emergency Systems Grant Program.
Potential compliance areas for federal programs include:
Auditors choose the compliance areas that are direct and material, those that are most important. These areas are audited for each major program.
Additionally, Single Audit reports are created by the auditor to communicate the results of the audit. That way, financial statement readers can see if the grantee (e.g., city) used the grant funds appropriately and whether the entity had proper internal controls. The auditor opines upon the major program grant compliance. If noncompliance is present or if related internal controls were not in use, the auditor reports the noncompliance or deficiencies in the Single Audit report.
Moreover, Single Audit reports include a schedule of expenditures of federal awards (SEFA). The SEFA includes a listing of expended federal awards.
Finally, the Single Audit report is filed with the federal audit clearinghouse once completed. The report is publicly available, so anyone can see the results of the audit.
Watch the video for the Single Audit overview in five minutes.
Charles Hall is a practicing CPA and Certified Fraud Examiner. For the last thirty-five years, he has primarily audited governments, nonprofits, and small businesses. He is the author of The Little Book of Local Government Fraud Prevention, The Why and How of Auditing, Audit Risk Assessment Made Easy, and Preparation of Financial Statements & Compilation Engagements. He frequently speaks at continuing education events. Charles consults with other CPA firms, assisting them with auditing and accounting issues.