Single audit – is your institution ready?

Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards Subpart F require all higher education institutions that receive and expend federal assistance totaling $750,000* or more during the entity’s fiscal year to have an annual audit performed by an independent (external) auditor. The single audit reporting package (including the audit report) must be submitted to the Federal Audit Clearinghouse (FAC) within 30 days after the institution receives its audit report or nine (9) months after the entity’s fiscal year-end.

Audit criteria is established by the Compliance Supplement, which identifies existing compliance requirements that the federal government expects to be considered as part of an audit. Use of the Compliance Supplement by the auditor is mandatory and updated annually to reflect changes and additions to program requirements.

Single audit objectives

Objectives of the single audit may include the following:

Financial statements: determine whether financial statements of the entity are presented fairly in all material respects and in accordance with Generally Accepted Accounting Principles (GAAP)
Compliance: determine whether the auditee has complied with federal statutes, regulations, guidelines and terms and conditions of the federal award that may have a direct and material effect on each of the entity’s major programs
Internal controls: gain a sufficient understanding of internal controls over federal programs to justify and support a low assessed risk of noncompliance for all major programs

While not a main objective, stakeholders will use the single audit to determine risks of subrecipients, per Uniform Guidance 2 CFR 200.332. For additional information on use of the single audit to determine subrecipient risks, read our recent insight, Conducting pre-award subrecipient risk assessments.

Schedule of Expenditures of Federal Awards (SEFA)

The Schedule of Expenditures of Federal Awards (SEFA) is a financial statement prepared by an entity to report total federal expenditures during the fiscal year, including amounts where the entity is the prime entity and funds passed through to sub-recipients. Not only is the SEFA a required component of the single audit reporting package submitted to the FAC, but also a document used by the external auditor to determine major programs. Auditors used a risk-based approach to identify which programs are required to be reviewed within the single audit. This approach includes identifying major programs, which, for many non-research-intensive institutions, will include financial aid.

Expenditures on the SEFA are reported by cluster (e.g., program, school, department, etc.) with a subtotal for each cluster and a breakdown by the agency/sponsor. The following elements are necessary to prepare the SEFA:

Type of award (grant or contract)
Reimbursement basis (cost or fixed)
Name of direct sponsor (federal funding agency or pass-through entity as appropriate)
Assistance listing number and associated federal program name
Applicable cluster assignment for each award
For pass-through awards, award ID assigned by the sponsor
Total federal expenditure
Total passed through to subrecipients

Is your institution ready for its single audit?

We can assist your institution in navigating the varying complexities of preparing for its annual single audit through a single audit readiness review or assessment.

Questions? Contact us.

What we do	What you get
Assess your institution’s policies, procedures and resources related to federal compliance and adherence to applicable laws and regulations	A facilitated discussion with key process owners across the institution to identify opportunities for increased communication and foster collaboration, as well as a policy gap analysis to determine what documentation needs to be updated, developed and implemented
Identify the roles and responsibilities between departments that are involved in control and monitoring activities	A clear understanding and layout of any controls or collaboration efforts in place to facilitate compliance with federal requirements
Evaluate current procedures to assess compliance with federal regulations and requirements	Actionable recommendations or enhancement opportunities to address identified gaps, challenges or risks based on federal regulations and requirements

Single audit readiness assessment in action

Professional uses data analytics to prepare reports

Client background

An independent, not-for-profit research institution was looking to assess compliance with federal, agency and institutional regulations and policies. This included a readiness assessment for their annual single audit.

Baker Tilly solution

Baker Tilly was engaged to complete a comprehensive review of the institutions’ sponsored research infrastructure and internal controls framework. Our team reviewed policies and procedures currently in place to identify control or procedural gaps. Internal controls around compliance requirements were tested to determine whether the institution had adequate controls, sufficient supporting documentation and any process or procedural gaps in place subject to remediation.

Results achieved

Baker Tilly identified gaps within the institutions’ policies and procedures, as well as control and procedural gaps through compliance requirements testing. We also provided recommendations for remediation of identified policy, control and procedural gaps.

Baker Tilly can help

Our specialized higher education risk advisory team can help your institution take a proactive approach to managing compliance requirements as they relate to single audit.

For more information on single audit, or to learn more about how Baker Tilly’s higher education internal audit specialists can help your institution, contact our team.

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Note*

OBM has issued a request for comment on proposed updates to revise sections of OBM Guidance for Grants and Agreements, which includes 2 CFR Part 200 Uniform Guidance. Specifically, a proposed increase to the single audit threshold from $750,000 to $1,000,000.