Podcast: Single Audits - What’s New, What’s Changing, What’s Challenging?

The Business of Government

With an influx in federal assistance programs over the last two years, state and local governments are finding single audit rules to be murky.

Key Points:

  • Understanding grant agreements is key to knowing if funds apply for single-audits
  • Single audits are triggered by spending federal assistance of $750,000+ in a year
  • Weaver’s specialists in Government Practice can guide single-audit needs

 

Government Industry Partners,Jennifer Ripka, CPA, and Jackie Gonzalez, CPA, discuss single audits and the challenges many government entities face with the influx of federal financial assistance received over the last two years. The Business of Government host,Adam Jones, points out, “There’s never been a year quite like the last couple of years in government assurance. We’ve seen a deluge of federal funds and it’s put a lot of government and not-for-profit agencies in a category they haven’t been in before – one that is required to have a single audit.”

The Single Audit Act was passed in 1984. It’s essentially an audit of federal financial assistance. The audit is triggered by spending $750,000 or more on federal awards in a single year.

The Journal of Accountancy reports, “More than 30,000 entities — primarily state, local, and tribal governments — have received funding as part of Treasury's $350 billion Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program. Recipients that spend $750,000 or more in such aid in a given year are normally subject to a single audit. However, many CSLFRF funding recipients are very small local governments that may previously have had little to no experience with single audits.”

Ripka advises that identifying grants and federal funding is key to understanding if they have to adhere to single-audit rules. Some federal funds are exempt and it can be difficult to recognize what compliance measures are necessary. “It can be challenging to understand the agreements, and yes that identification piece is really, really important,” Ripka urges. Gonzalez adds, “Understanding what is allowable under a grant is most important for compliance.”

Finally, accepting funding from grants also means that the entity must execute clear communication and transparency within its agency. Ripka warns that without it, entities could end up in “a situation where you are spending funds that finance doesn't know about, and revenue recognition isn’t lining up.” For the longevity of the entity, funding needs to be optimized between what’s allowable and the entity’s needs. This requires strategy and understanding of where the funds can be spent.

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