A single audit is an audit of a federal award that is expended by state and local governments and non-profit entities.  The audit is performed to ensure that the entity expending the funds is following all of the rules and regulations of the award.  A federal award program must be audited if there has been at least $750,000 in aggregate expenditures (not aggregate awards) in a fiscal year.  

Who Governs the Single Audit Program?

The Single Audit Act of 1984 standardized the audit of federal awards for state and local governments and non-profit entities.  The Single Audit Act Amendments of 1996, now referred to as the ‘Single Audit Act’, improved the efficiencies of these audits and reduced some of the audit burden created in the original act.  Government-wide policy-making for conducting single audits falls under the authority of the Office of Management and Budget (OMB).  The OMB has developed uniform guidelines for independent auditors to follow when performing the audit of federal programs for a client.  The uniform regulations are found in Title Two of the Code of Federal Regulations (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and these regulations include the uniform cost principles and audit requirements for federal awards to non-federal entities as well as the administrative requirements for federal grants and cooperative agreements. The OMB issues an annual Compliance Supplement that details out federal program requirements by individual federal departments.    

What is the OMB Compliance Supplement?

The Compliance Supplement identifies existing important compliance requirements that the federal government expects to be included in the single audit being performed.  While not every federal program is detailed out in the Compliance Supplement, it does detail out many programs including which compliance requirements are considered important and have a direct and material effect on the program.  Following the Compliance Supplement is mandatory, and for programs not specifically detailed in the Supplement, information is provided to assist the auditor in determining the requirements that have a direct and material effect on the program.    

What Specific Information is Included in the Supplement?

Part One of the Supplement explains its purpose and applicability.  The Matrix of Compliance Requirements is listed in Part Two of the Supplement.  The Matrix serves as a directory of the federal programs included in the Compliance Supplement and the applicable compliance requirements.  Part Three breaks down the compliance requirements (there are 12 in total) and the audit objectives for each requirement.  Suggested audit procedures are included in Part Three, but it is up to the independent auditor to determine the necessary procedures.  The audit objectives and suggested procedures for internal control are also detailed in Part Three.    Specific agency program objectives and procedures and compliance requirements are listed in Part Four of the Supplement.  Part Five covers program clusters, which is a grouping of closely-related programs with similar compliance requirements.  Programs within a cluster are treated as one program for single audit testing purposes.  Part Six explains the internal control compliance requirements that must be tested by the auditors.  Guidance for agency programs not specifically listed in the Compliance Supplement are addressed in Part Seven.