Sneak Preview: Audit Threshold Increases to $1M In Final Revisions to Subpart F
(The following is excerpted from a recent Thompson Grants Compliance Expert article.) The single audit threshold under subpart F of the Office of Management and Budget’s (OMB) 2024 revisions to the uniform guidance (2 C.F.R. Part 200) will increase from $750,000 in federal awards expended within a nonfederal entity’s fiscal year to $1 million (§200.501(a)). The threshold increase was one of several changes that will take effect to subpart F under these revisions.
Due to this threshold increase, the final guidance clarifies that a nonfederal entity that does not expend $1 million in federal awards in a fiscal year would be exempt from a single audit (§200.501(e)). “The increase in the threshold should not materially increase the burden related to monitoring subrecipients; the requirement to have an audit conducted is not a substitute for proper monitoring,” OMB notes in the introductory language to the revised guidance. “Regardless of whether audit requirements apply, pass-through entities should monitor subrecipients consistent with requirements” in 2 C.F.R. Part 200.
The final revisions, which become effective for new awards on or after Oct. 1 (unless federal agencies elect to implement them early), reflect many of the proposed updates included in OMB’s October 2023 proposed revisions (see “OMB Proposes To Raise Single Audit Threshold to $1 Million,” November 2023), while other proposed changes were deleted in response to stakeholder comments, and a few additional changes have been made.
While OMB now uses the term “recipient” and “subrecipient” within subparts A-E of the 2024 uniform guidance instead of the term “nonfederal entity,” it generally maintains the use of “nonfederal entity” within subpart F to avoid confusion, as the Single Audit Act, as amended, applies to nonfederal entities under that terminology. However, OMB clarifies in §200.501(g) that “unless a program is exempt by federal statutes, federal awards expended as a recipient or a subrecipient are subject to audit under this part.”
OMB also clarifies at §200.501(h) that for procurement transactions in which a contractor must comply with program requirements, the auditee must ensure those requirements are met, including by clearly stating the contractor’s responsibilities within the contract and reviewing its records to determine compliance. “In other words, an auditee may not simply rely on procurement transactions to achieve program compliance — or outsource the function of complying with a federal program requirement to a third-party contractor without monitoring the activities to ensure compliance,” OMB explains. “The responsibility for program compliance continues to belong to the auditee.”
(The full version of this story has now been made available to all for a limited time here.)
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