Welcome to Feldesman's Grants Practice Shorts series where we discuss helpful tips and strategies in common areas of federal grant management. Be sure to check out our other installments on our Grants Practice Shorts page.
Our last Practice Short discussed grantees' single audit responsibilities under Subpart F of the Uniform Guidance. This time, we focus on program-specific audits.
Program-Specific Audits – Applicability
Effective for grantees' full fiscal years following October 1, 2024, a grantee is not required to have a Single Audit if it expends less than $1,000,000 in federal awards (including subawards). The threshold is $750,000 for fiscal years beginning before October 1, 2024. 2 C.F.R. § 200.501; see also OMB, Final Rule: Guidance for Federal Financial Assistance, 89 Fed. Reg. 300100−300101 (April 22, 2024).
A program-specific audit may be an option when a single audit is required but certain circumstances make a less-intrusive option possible. Grantees may seek to have only a program-specific audit if they meet three conditions. First, the grantee must expend funds under only one federal program. Second, the single federal program at issue may not be research and development, unless all the funds expended were received from the same federal agency and the federal agency provides prior approval. And third, the federal program's statute, regulations, or terms and conditions must not specifically require a full financial statement audit. § 200.501(c) and (d).
Program-Specific Audits – Scope
Most notably, program-specific audits differ from full single audits in that they do not entail full financial statement audits. Rather, the grantee is to prepare for review only financial statements specific to the program under review, and the auditors examine only the expenditures made under that particular federal program. In preparing program-specific financial statements, the grantee includes at least a Schedule of Expenditures of Federal Awards ("SEFA"), notes describing the significant accounting policies used to prepare the schedule, a summary schedule of prior audit findings and, when necessary, a corrective action plan addressing findings. § 200.507(b)(2).
With program-specific audits, as with compliance audit procedures for major programs selected for examination during a single audit, the Office of Management and Budget ("OMB") Compliance Supplement—which is updated annually and incorporated into the Uniform Guidance as Appendix XI—is a key source of guidance. See § 200.507. The 2024 OMB Compliance Supplement is available at https://www.whitehouse.gov/omb/office-federal-financial-management/current-compliance-supplement/ (last visited December 8, 2024).
In conducting its review and preparing its audit report, the auditor must: (i) perform an audit of the financial statement for the program in accordance with GAGAS (Generally Accepted Government Auditing Standards, also known as the "Yellow Book"), (ii) test internal controls "consistent with the requirements for a major program," and (iii) "follow-up on prior audit findings." § 200.507(b)(3)(i), (ii) and (v).
Program-Specific Audits – Report Submission
As with organization-wide Single Audit Act reports, grantees submit program-specific audit reports to the Federal Audit Clearinghouse. "Unless a different period is specified in the program-specific audit guide, the audit must be submitted within 30 calendar days after the auditee receives the auditor's report(s) or nine months after the end of the audit period (whichever is earlier)." § 200.507(c)(1).
Considering cost, administrative burden, and scope of resulting public disclosure, a program-specific audit may be a significantly less intrusive option than a full Subpart F audit for grantees that only expend federal funding under one program. If interested in a program-specific audit, a grantee that appears otherwise eligible for a program-specific audit (under the criteria described above) should inquire with its auditor about its eligibility early in the audit process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
