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Plain-English guide · for nonprofits
What triggers a single audit?
Updated August 2026
One number decides it, and a surprising amount of confusion surrounds what counts toward it.
2 CFR 200.501 states: “A non-Federal entity that expends $1,000,000 or more during the non-Federal entity's fiscal year in Federal awards must have a single or program-specific audit conducted for that year.”
Expended, not received
The trigger is what you spent in your fiscal year, not what you were awarded. A three-year $2.4M grant doesn't trigger anything on day one; the year you spend $1,000,000 or more of federal money is the year it applies.
This cuts both ways. A slow-spending year may stay under. A year where two grants overlap and you spend heavily may cross it unexpectedly, which is why the total is worth tracking through the year rather than discovering in month eleven.
Pass-through money counts
The most common surprise. Federal funds you receive as a subaward through a state agency, a city, a county or a larger nonprofit are still federal awards, and they count toward your total. Payments for goods or services you provide as a contractor do not (2 CFR 200.501(g)), so ask whether each agreement is a subaward or a contract.
An organization with no direct federal grants can still cross the threshold entirely on subawards. If you aren't sure whether a grant is federal in origin, ask the entity that gave it to you, they are obliged to tell you.
What isn't included
Money that isn't a federal award doesn't count, individual donations, most foundation grants, corporate giving, program fees, and state or local funds that didn't originate federally. For a subaward, the test is the original source, not who handed you the cheque.
What a single audit is
It is broader than a standard financial statement audit. Alongside your financials, the auditor examines compliance with the requirements attached to your major federal programs, eligibility, allowable costs, reporting, procurement, and how you documented payroll charged to those programs.
It costs more than a regular audit and takes longer. If you expect to cross the threshold, budget for it early; auditors with single audit experience book up.
If you're getting close
- Track the running total of federal expenditure through the year, including pass-through.
- Ask your funders in writing whether their money is federal in origin, and keep the answers.
- Get your payroll documentation in order first. It's the largest cost and the most examined area.
- Engage an auditor early. Confirm they have single audit experience, not every firm does.
This is general information, not legal or accounting advice. Federal grant rules change and are applied differently by different agencies and auditors. Check with your auditor, your grant officer, or an attorney before relying on any of it.
The Ember tool for thisEmber Time
Ember Time lets your team log time by program, and you approve the week. Approved hours for hourly staff become each program's staff cost at the rate you set. Unlimited users on every tier.
Sources: 2 CFR Part 200 (eCFR), §200.501, audit requirements. Threshold quoted verbatim and verified 17 August 2026. Thresholds change, check the source.