Single audit threshold: what triggers it and how to prepare

Key Takeaways

• The single audit threshold is $1,000,000 in federal awards expended during the fiscal year, raised from $750,000 by OMB's 2024 revisions to the Uniform Guidance, codified at 2 CFR 200.501.

• The new $1 million threshold applies to fiscal years beginning on or after October 1, 2024. Federal awards issued before that date remain subject to the old $750,000 threshold, creating a dual standard for organizations with multi-year grants that straddle the effective date.

• The test is based on federal awards actually expended during the fiscal year, not awarded, received, or committed, and it aggregates spending across every federal program the organization touches, not just one grant in isolation.

• A May 2026 OMB proposal to further revise the Uniform Guidance does not lower the $1 million threshold or reverse the related 15% de minimis indirect cost rate; both remain in effect under the current rule.

• Falling below the federal threshold removes the Single Audit requirement for that year, but state law, funder terms, and lender covenants can still independently require an audit regardless of the federal trigger.

A nonprofit spent $900,000 in federal grant funds this fiscal year. Under the rule that governed federal audits for the previous 27 years, that would have triggered a Single Audit. Under the current rule, it doesn't. Knowing which threshold actually applies, and to which specific award, is now more complicated than checking one number, because the old and new thresholds can both be in effect simultaneously depending on when each grant was issued.

Numetix takes an expert-led, AI-powered, and human-in-the-loop approach to federal compliance thresholds, tracking which threshold applies to which specific award before assuming the organization is exempt. This guide covers the current rule and the transition complexity most guidance glosses over.

Quick Answer: What is the current single audit threshold?

• $1,000,000 in federal awards expended during the fiscal year, under 2 CFR 200.501, for fiscal years beginning on or after October 1, 2024.

• Awards issued before that date remain subject to the prior $750,000 threshold, which means an organization with older, still-active federal awards may need to test against both thresholds depending on the specific grant.

• The test counts federal awards actually expended, aggregated across all federal programs, not the size of any single award or the total amount awarded but not yet spent.

What changed, and when

The Office of Management and Budget's 2024 revisions to the Uniform Guidance under 2 CFR 200.501 raised the Single Audit threshold from $750,000 to $1,000,000, the first change to this number since 1997. The new threshold applies for fiscal years beginning on or after October 1, 2024, meaning the first audits reflecting the higher threshold are being filed now, for fiscal years ending in late 2025 and beyond. An organization spending between $750,000 and $999,999 in federal funds, which previously required a Single Audit, may no longer be subject to that requirement at all under the current rule, depending on when the applicable awards were issued, though state-level requirements and the organization's board oversight responsibilities around financial review remain separate considerations.

Why the transition creates a genuine dual-threshold problem

This is the detail most surface-level guidance skips entirely. Federal awards issued before October 1, 2024 remain governed by the old $750,000 threshold for the life of that specific award, even though the general rule has since changed. An organization holding a multi-year federal grant that began in 2023, alongside a newer grant issued in 2025, may need to evaluate its audit obligation against two different thresholds simultaneously, depending on which awards' expenditures push the organization over which line, a determination that flows directly from the grant's own reporting terms and issue date. This dual position is expected to persist through 2026 and beyond for any organization with federal awards spanning the transition date, which makes a simple "are we under a million dollars" check insufficient without also confirming the issue date of every active award.

How the expenditure test actually works

The threshold is based on federal awards expended, not the size of the grant awarded, the amount received in cash, or funds merely committed but not yet spent. This is a critical distinction: an organization might hold a $2 million multi-year federal award but only expend $600,000 of it in a given fiscal year, meaning that award alone wouldn't trigger the threshold for that year. The test also aggregates expenditures across every federal program an organization touches, whether direct federal awards or federal funds passed through a state or another entity, not just the largest single grant.

What OMB's May 2026 proposal does and doesn't change

A May 2026 OMB proposal to further refine the Uniform Guidance does not lower the single audit threshold or reverse the related 15% de minimis indirect cost rate; both remain in effect under the current rule as of this writing. Organizations that have already adjusted their compliance calendars and internal controls to the $1 million trigger should not expect that number to move as a result of this specific proposal, though any final rule should be confirmed against the current text of 2 CFR 200.501 before an organization finalizes its own audit determination for a given year.

Frequently asked questions

Does falling below $1 million in federal expenditures eliminate all audit obligations?

It eliminates the federal Single Audit requirement specifically, but not necessarily every audit obligation. State law, individual funder agreements, and lender covenants can independently require a financial statement audit regardless of whether the federal threshold is met, a determination that belongs within the board's financial oversight responsibilities. An organization should confirm its state's specific nonprofit audit threshold and any funder-specific audit requirements separately from the federal test.

What is a program-specific audit, and when can an organization use one instead of a full single audit?

A program-specific audit is a narrower alternative available when an organization expends federal awards under only one federal program, rather than multiple programs, and that program's own guidance permits this option. It focuses the audit scope on that single program rather than the organization's finances as a whole, which can reduce audit cost and time compared to a full Single Audit, but it's only available under specific conditions defined in 2 CFR 200.501.

How does an organization determine whether pass-through federal funds count toward the threshold?

Federal funds received indirectly through a state agency or another pass-through entity generally count toward the threshold the same way direct federal awards do, since the test is based on the ultimate source of the funds, not the immediate payer. An organization receiving federal funds through multiple pass-through relationships should aggregate all of them, along with any direct federal awards, when determining whether the expenditure threshold has been crossed, and should track each award's specific reporting deadline alongside this aggregation.

For nonprofit organizations tracking federal award expenditures across multiple grants and issue dates, our accounting services monitor the applicable threshold for each award before audit season arrives, expert-led, AI-powered, and human-in-the-loop.

See the fund accounting for nonprofits guide for the full grant tracking and compliance framework.