OMB Increases Single Audit Threshold

In April 2024, the Office of Management and Budget (OMB) issued updated guidance for federal financial assistance, including revisions to Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Notably, the updates increase the Single Audit threshold from $750,000 to $1 million for federal awards issued on or after October 1, 2024.  

What Is a Single Audit? 

A Single Audit is a comprehensive financial and compliance audit required for non-federal entities—such as state and local governments, nonprofits, universities, and tribal organizations—that expend a certain amount of federal funds in a fiscal year. It was established under the Single Audit Act of 1984, later amended in 1996, and is governed by the Uniform Guidance codified in 2 CFR Part 200, Subpart F.  

Uniform Guidance Threshold Updates 

Effective for fiscal years beginning on or after October 1, 2024, the OMB increased the Single Audit threshold from $750,000 to $1,000,000 in federal expenditures. The Type A program threshold has also increased from $750,000 to $1 million for non-federal entities with annual expenditures of $34 million or less. Entities spending less than $1 million in federal funds annually are no longer required to undergo a Single Audit. This revision is expected to lessen the audit and reporting burden and allows federal audit resources to concentrate on larger awards with potentially higher compliance risks. 

Other OMB changes include: 

• Increasing the De minimis rate from 10% to 15% of Modified Total Direct Costs (MTDC) for entities without a negotiated indirect cost rate 
• Raising the Subaward Exclusion Threshold from $25,000 to $50,000 for MTDC calculations 
• Raising the threshold for equipment classification increased from $5,000 to $10,000 
• Revising Section 200.512, Audit Report Submission, to allow extensions for audit report submissions beyond the standard 9-month deadline, if justified 
• Clarifying definitions and adding a requirement to describe undetermined questioned costs in audit findings 
• Redefining “period of performance” to mean the start-to-end date of a federal award, which may include multiple budget periods. Identification of this period does not guarantee future funding.  

Key Considerations and Ongoing Priorities 

Sustaining compliance awareness: Organizations must continue documenting expenditures, tracking funding sources, and maintaining proper reporting to meet internal and external accountability standards. 

Monitoring annual expenditures: For entities whose federal funding fluctuates year to year, close monitoring is critical. Accurate tracking of expenditures throughout the fiscal year helps determine early whether a Single Audit will be required. 

Strengthening internal controls: Robust internal control systems and consistent documentation safeguard compliance readiness. These practices also support timely decision-making and strengthen the integrity of financial reporting, regardless of audit thresholds. 

Adapting with Confidence 

As the OMB guidance and regulatory expectations continue to evolve, our team remains committed to helping clients adapt with confidence. Through financial statement audits, internal control assessments, and compliance consulting, we help organizations maintain transparency, accountability, and operational efficiency in an ever-changing landscape. If you have questions about how the Single Audit threshold increase may affect your organization, please reach out to us using the form below.