Navigating the New Single Audit Landscape: Your Essential Transition Guide for the $1 Million Threshold

Are you ready for one of the most significant changes to federal audit requirements in decades? The Office of Management and Budget (OMB) has increased the Single Audit threshold from $750,000 to $1 million, effective for fiscal years beginning on or after October 1, 2024. While this change brings welcome relief for many organizations, it also creates a complex transition period that requires careful planning and strategic preparation.

Understanding the Key Changes in Uniform Guidance

The April 2024 revisions to Uniform Guidance include several important updates beyond just the threshold increase. The single audit threshold jump of 33% – from $750,000 to $1 million – represents the first increase since 1997. Additionally, the de minimis indirect cost rate has increased from 10% to 15%, providing greater flexibility for organizations without negotiated rates. The threshold for capital expenditures has also risen from $5,000 to $10,000, along with streamlined procurement standards designed to reduce administrative burden while maintaining accountability.

This threshold change creates immediate compliance relief for thousands of organizations, but the transition period requires careful attention to timing and documentation. Organizations need to understand that different rules may apply simultaneously, depending on when individual grant agreements were executed.

Navigating the Complex Transition Timeline

The most critical aspect of this change is understanding the timing. The new threshold applies to federal awards issued after October 1, 2024, meaning organizations may operate under different requirements simultaneously. This creates a mixed compliance environment where you might need to follow both old and new standards for different grant awards.

Your immediate action items should include implementing robust federal expenditure tracking systems that can differentiate between pre- and post-October 1, 2024 awards. Create monthly reporting mechanisms that aggregate all federal funding sources, including direct grants, pass-through awards, and in-kind contributions. This documentation will be essential for determining which compliance requirements apply to each award.

Strategic Steps for Successful Transition

Begin by conducting a thorough assessment of your current and projected federal expenditures through 2026. Review existing grant agreements to understand their award dates and applicable requirements. Establish relationships with qualified auditors before you need them, as demand for specialized government contract auditing expertise will likely increase as organizations navigate these changes.

Don’t forget that state requirements operate independently of federal changes. While federal thresholds have increased, many states maintain their own audit requirements that may be more stringent. California still requires audits for nonprofits with gross income over $2 million, and other states have similar independent requirements.

Most importantly, remember that falling below the threshold doesn’t eliminate compliance obligations. Grant agreements may still require specific audits regardless of the federal threshold, and maintaining strong internal controls remains essential for regulatory compliance and organizational effectiveness.

Your Next Steps

The Single Audit threshold change represents both an opportunity and a challenge. Organizations that approach this transition strategically will find themselves better positioned for future growth and compliance success. Start by assessing your current situation, implementing robust tracking systems, and ensuring your team understands the new requirements.

Ready to navigate these changes with confidence? Keegan Linscott & Associates specializes in government contracting compliance and has helped clients successfully manage federal audit requirements for over two decades. Our team of certified professionals understands the complexities of FAR compliance, Single Audit requirements, and the intersection of federal and state regulations. Contact our office today to speak with one of our government contracting experts and ensure your organization is fully prepared for the new Single Audit landscape.