Published: May 3, 2021
With the pandemic, many governments have and will receive additional federal funding, such as the Cares Act. For some governments, this might mean going through a federal single audit for the first time.
A federal single audit is required when you spend more than $750,000 of federal funds in one year, regardless of whether those federally-sourced funds came directly from the federal government or were passed through from a state or local government.
If you anticipate meeting this federal funding threshold, the time to start preparing for an audit is as soon as you receive an award.
Federal single audits are a bit different from other types of audits, as they are compliance driven. The grantor determines which requirements you must follow and that are subject to audit, and auditor evaluates which of those we must audit. Our audit will evaluate and test the internal control processes you put in place over each grant requirement, as well as test that you are in compliance with it.
Here are five tips to help get you started:
- Identify your compliance requirements subject to audit. First, thoroughly read your grant agreement and the grant requirements you agreed to when accepting the award. We test a selection of requirements, which you can find listed for most federal programs in the OMB Compliance Supplement (along with the suggested audit procedures). We expect the 2021 compliance supplement to be issued soon. The compliance supplements can be found here: www.whitehouse.gov/omb/office-federal-financial-management/.
2. Contact your grantor directly with questions. Your grantor is the best source of information for any uncertainty or questions you have about grant compliance. Be sure to get the grantor’s response in writing, or confirm conversations in writing in a follow up email, and maintain this documentation for audit. The best advice we can give is don’t wait, resolve your questions and issues timely.
3. Identify your key internal controls over each compliance area and make sure they are documented. For each applicable requirement, you should have a process in place designed to ensure you are in compliance. You should document these processes in writing, and it’s particularly important to maintain documentation and how you carried out the controls you designed. For example, if your control is a report review, make sure the review is documented and that documentation is retained for audit.
4. Know your resources. If the granting agency publishes guidance, bulletins, a handbook, or other resources intended to guide or inform you, make sure you use them. Stay well-informed of changing requirements and implement them timely.
5. Have a plan should turnover occur. It can be challenging to go through an audit when key personnel leave and no one can describe the key controls to the auditor or find the grant documentation. If you rely heavily on one person to administer a grant, then cross-training is probably a good idea. Also, management should oversee what grant information is being documented, and where this documentation is kept. Ideally you would maintain documentation to:
- identify your key controls,
2. show evidence those key controls were actually performed, and
3. demonstrate your compliance with grant requirement
If you identify the need for a federal single audit this year, be sure to reach out to your local audit team to discuss scheduling. You can find a contact for your local audit team by visiting our website at sao.wa.gov/about-audits/find-your-audit-team/
Looking for additional resources?
Remember, we are here to help. While your grantor is the best source for information about a federal program, you can also submit technical questions about federal awards to our Help Desk, available in the client portal, https://portal.sao.wa.gov/saoportal/Login?ReturnUrl=%2fsaoportal%2f.
For training on grant compliance, see Washington Finance Officers Association non-conference training schedule, https://www.wfoa.org/training-header/
If you have other questions, comments or suggestions, feel free to email us at Center@sao.wa.gov.