Single Audit Preparation Checklist: A Step-by-Step Guide for First-Time Auditees Under $5M

If your organization spends $1,000,000 or more in federal awards during your fiscal year, you are required to have a Single Audit conducted in accordance with 2 CFR Part 200, Subpart F. This guide provides a step-by-step preparation timeline designed for first-time auditees and organizations with annual federal expenditures under $5 million.

Before Audit Season: Foundation (Months 1-3 of Fiscal Year)

Determine Single Audit Applicability

• Calculate total federal expenditures for the prior fiscal year using your general ledger, not award amounts
• Include direct awards and pass-through funds in the calculation
• Document the calculation methodology and retain it in your audit file
• If expenditures exceeded $1,000,000, the Single Audit is required (2 CFR 200.501)

Engage Your Auditor Early

• Issue an RFP or engage your current auditor within the first quarter of the fiscal year
• Confirm the auditor meets independence requirements and is licensed under Government Auditing Standards (Yellow Book)
• Establish the audit timeline: interim fieldwork, year-end fieldwork, and report delivery dates
• Request a list of items the auditor will need (the PBC list) and begin compiling early

Mid-Year: Build Your Evidence (Months 4-6)

Prepare the Schedule of Expenditures of Federal Awards (SEFA)

• Build a crosswalk between your general ledger accounts and each federal award
• For each award, document: CFDA number (now ALN), federal agency, pass-through entity (if applicable), award amount, and expenditures for the period
• Reconcile the SEFA to your general ledger at least quarterly
• Identify Type A programs (generally awards exceeding the larger of $750,000 or 3% of total federal expenditures) as these will likely be tested

Organize Compliance Evidence by Area

Auditors test compliance across 12 areas defined in the OMB Compliance Supplement. For each major program, organize evidence for:

1. Activities Allowed/Unallowed: Documentation showing each expenditure is for an allowable activity under the award terms
2. Allowable Costs: Cost allowability determinations, allocation methodologies, and supporting documentation
3. Cash Management: Draw-down timing records showing minimal elapsed time between receipt and disbursement
4. Eligibility: Beneficiary eligibility determinations (program-specific)
5. Equipment Management: Property inventory, use logs, and disposition records for federally-funded equipment
6. Matching/Level of Effort: Documentation of required cost share with the same rigor as direct federal charges
7. Period of Performance: Evidence that all costs were incurred within the authorized period
8. Procurement: Complete procurement files with method rationale, competition evidence, SAM.gov checks, and required contract clauses
9. Program Income: Records of income generated under the award and how it was applied
10. Reporting: Copies of all submitted financial and performance reports with supporting workpapers
11. Subrecipient Monitoring: Risk assessments, monitoring plans, desk review workpapers, and management decisions
12. Special Tests: Program-specific requirements from the Compliance Supplement

Pre-Audit: Final Preparation (Months 7-9)

Resolve Prior Findings

• Review all prior-year audit findings and management letter comments
• Verify that corrective action plans have been implemented with documented evidence
• Prepare a summary of the status of each prior finding: Fully Corrected, Partially Corrected, or Not Corrected (with explanation)
• Repeat findings are a red flag for auditors and can escalate a Significant Deficiency to a Material Weakness

Internal Controls Self-Assessment

• Walk through your key control activities for each major program
• Verify separation of duties is documented and operating as designed
• Test a sample of transactions yourself before the auditor does
• Document any control exceptions found and the corrective action taken

During the Audit (Months 10-12)

• Respond to auditor requests within 48 hours to keep fieldwork on schedule
• Designate a single point of contact for the audit team
• Track open items in a shared log with the auditor
• Review draft findings before the exit conference and prepare management responses
• Submit the Data Collection Form and reporting package to the Federal Audit Clearinghouse within 30 days of receiving the report (and no later than 9 months after fiscal year-end per 200.512)

Common First-Time Auditee Mistakes

1. Starting SEFA preparation at year-end instead of maintaining it throughout the year
2. Assuming the financial statement auditor handles everything — the Single Audit has additional compliance testing beyond the financial statements
3. Not identifying Type A programs early — these programs receive the most scrutiny and require the most documentation
4. Missing the FAC submission deadline — late submissions can trigger federal awarding agency sanctions
5. Ignoring prior-year findings — repeat findings escalate in severity and signal systemic control weaknesses

Get Your Compliance Score Before the Auditor Does

The free Grant Readiness Assessment evaluates your organization across all 7 compliance domains that auditors test during a Single Audit. You will receive a score (0-100), a gap analysis identifying your highest-risk areas, and a prioritized remediation roadmap. The full report ($19) includes 14 customizable policy templates and financial impact estimates for each compliance gap.

This guide reflects requirements under 2 CFR Part 200 as revised October 1, 2024. The Single Audit threshold is $1,000,000 in federal expenditures per fiscal year. Always verify current requirements with your auditor and at ecfr.gov.