Does Your Municipality Really Need a Single Audit?

CPAs & Advisors

Michael Rolka
Michael Rolka CPA, CGFM Principal CPAs & Advisors

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Many municipalities are subject to a single audit. Is your municipality also subject to group auditing standards? Perhaps that is your exact situation. There are circumstances when your primary government expends much less than $750,000 (the minimum threshold that triggers a single audit) in federal awards, but some of the components of the group also have federal awards. Is the aggregate of all federal awards expended more than $750,000? You may or may not be required to undertake a single audit.


  • Single audits are required when federal expenditures exceed $750,000.
  • In the case of group audits, the $750,000 applies to all expenditures of the components of the group.
  • If the components of the group have separately issued financial statements (and if applicable, single audits), the primary government does not need to include the expenditures of federal awards of the other components in their schedule of expenditures of federal awards. This situation could, under certain circumstances, eliminate the need for a single audit even if the aggregate expenditures of federal awards are more than $750,000.

Uniform Guidance was effective December 26, 2014, and at that point the threshold of federal expenditures that required entities to undergo a single audit was increased from $500,000 to $750,000. Typically, municipalities apply the $750,000 threshold to expenditures that are directly made by the government or awarded to sub-recipients. When these expenditures exceed $750,000, it is clear that the municipality needs a single audit.

What if the primary government is also a component of a group audit, with several other components that also expend federal awards? When the total of the group exceeds $750,000, a single audit is typically required. In this instance, it can be tricky to gather the necessary information that auditors will request when the federal award programs are spread among various components of the group.

There is a way out of the single audit madness! If each component has its own financial statement audit (and potentially single audit), then the primary government is not required to include the expenditures of federal awards in the primary government’s schedule of expenditures of federal awards. In the case of a primary government with relatively low expenditures of federal awards and components that also have federal expenditures, this could eliminate the need for the primary government to undergo a single audit. The authority to do this is directly from Uniform Guidance – 2 CFR 200.514(a), which reads as follows:

§ 200.514 Scope of audit.

(a)General. The audit must be conducted in accordance with GAGAS. The audit must cover the entire operations of the auditee, or, at the option of the auditee, such audit must include a series of audits that cover departments, agencies, and other organizational units that expended or otherwise administered federal awards during such audit period, provided that each such audit must encompass the financial statements and schedule of expenditures of federal awards for each such department, agency, and other organizational unit, which must be considered to be a non-federal entity. The financial statements and schedule of expenditures of federal awards must be for the same audit period.

The important distinction here is the option to undergo a series of audits. Of course, there are pros and cons to performing a series of audits:


  • No single audit.
  • Gathering information can be difficult when the components are widespread.


  • Each component needs a separate financial statement audit (and potentially a single audit).
  • The cost to obtain separate audits may be prohibitive.

All of this leads to one question – Is it worth it for your municipality to initiate a series of audits rather than have a single audit performed? That answer will vary by municipality, but at least you know you have the option. It is important to consider all of the factors when making this determination.

A final consideration is to determine what each source of revenue may require. Look through your grant agreements to make sure that those requirements are all still being met before making your final decision.


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