Finance

A Single Audit is a special audit that reviews both your financial statements and how federal funds were used. Its purpose is to help ensure federal funds are spent properly and in line with program requirements.

Single Audits follow federal auditing standards, including Generally Accepted Auditing Standards (GAAS), Generally Accepted Government Auditing Standards (GAGAS), and the Guidance for Federal Financial Assistance (2 CFR Part 200), which sets the rules for managing federal awards.

Single Audits are performed by independent public accounting firms.

A single audit has two main parts:

Financial Statement Audit - Auditors review your financial statements to make sure they are accurate and complete.

Federal Program Compliance Testing - Auditors also test selected federal programs to make sure your organization followed federal rules. This may include reviewing:

• Allowable costs 
• Procurement (purchasing) procedures 
• Payroll records 
• Reporting requirements 
• Grant agreements 
• Internal controls

What auditors review depends on the federal program. In general, they check key compliance requirements, such as:

• activities allowed or disallowed,
• allowable costs/cost principles,
• cash management,
• eligibility,
• equipment and real property management,
• period of availability,
• purchasing,
• reporting,
• subrecipient monitoring, and
• special tests and provisions.

Examples of common Single Audit findings are available at Common Single Audit Findings - and How to Avoid Them | Vermont League of Cities and Towns.

When questions come up about federal grant requirements, it is always best to ask your funder for guidance before acting.

Yes. If your municipality is required to have a Single Audit, a reasonable share of the audit cost may be charged to your federal awards under federal rules (2 CFR § 200.425). The audit must follow federal Single Audit requirements.

If you expect a Single Audit will be required, it is best to include those costs in your project budget from the start. Federal agencies typically do not provide extra funding later to cover audit costs.

An Assistance Listing (AL) number is a five-digit number, XX.XXX. The first two digits represent the funding agency, and the last three represent the assistance listing.

A municipality is required to have a Single Audit if it spends $1 million or more in federal funds during its fiscal year.

For FEMA Public Assistance grants, spending is counted when FEMA approves the funding (i.e., approval of the Award Worksheet), because that is when the funds are officially obligated.

A Single Audit covers your municipality’s entire financial operations and the federal awards managed during the audit period. This includes all departments, agencies, and organizational units that spent or administered federal funds.

Municipalities must submit a data collection form and a reporting package as part of the Single Audit process. Federal requirements for these submissions are listed in 2 CFR §§ 200.512(b-d).

The submission is due within 30 days after receiving the auditor’s report or 9 months after the end of the fiscal year — whichever comes first. If the due date falls on a weekend or federal holiday, the deadline moves to the next business day.

Single Audit reporting packages must be submitted electronically to the General Services Administration’s Federal Audit Clearinghouse (FAC). The FAC provides instructions, submission guidance, and FAQs to help with the process.

Your auditor may submit the Single Audit on your behalf. If you want this service included, be sure to include that information in your audit Request for Proposals and in the contract scope of work.

Yes. Single Audit reports and data collection information are available to the public on The Federal Audit Clearinghouse.

Once a Single Audit has been submitted to the Federal Audit Clearinghouse (FAC), it cannot be changed or removed. The submitted report is the official version available in the FAC system.

If you need help or have questions about a submission, you can contact the FAC Help Center.

Possibly. Your cognizant or oversight audit agency may approve an extension if the 9-month deadline creates a hardship (2 CFR § 200.512(a)(1)). This is typically the federal or state agency that provided the most funding for the audit year.

Extension requests should be made in writing as soon as you expect a delay. The request and the agency’s response must be kept in your grant files.

When reviewing an extension request, the cognizant audit agency looks at whether the delay is a serious and unavoidable problem that prevents timely submission of the audit.

Your explanation should show that the issue:

• Could not have been avoided with normal planning or reasonable effort.
• Did not only affect the audit, but also other parts of project work or performance.

Be sure your written justification clearly addresses both points.

If you expect your Single Audit will be late, you should notify your federal funders in writing as soon as possible. You should also notify your cognizant federal agency, if you have one.

In your notice, explain why the audit will be late and give your best estimate of when it will be submitted. If you have not secured an auditor, include the steps you have taken or will take to find one. One of these steps should be posting your Request for Proposals to the Vermont Bid Registry.

Keep a copy of your notice and any responses in your grant files.

Yes. If a municipality does not complete a required Single Audit, federal funders must treat this as noncompliance with the terms of the award (2 CFR § 200.505).

Funders may take actions to address noncompliance under 2 CFR § 200.208 and § 200.339. These actions can range from additional requirements to more serious steps, including limits on future funding.

Before taking action, the funder will review factors such as risk, past compliance, performance history, and financial capacity. The funder must also notify you before applying any conditions and will remove them once Single Audit requirements are met.

Audit findings are issues identified during the audit related to financial reporting, compliance, or internal controls. They may point to weaknesses in how financial information is recorded, reviewed, or supported.

Findings are grouped by level of concern:

• Material weakness – A serious problem that could cause major errors in financial statements. These must be addressed right away. 
• Significant deficiency – An important issue that is less severe than a material weakness but still needs attention. 
• Control weakness – A smaller issue that may increase risk and can often be improved through better processes. 

Addressing findings helps strengthen financial management and support future funding opportunities.

If your Single Audit includes findings, review them carefully and make sure you understand the auditor’s comments and recommendations. Ask questions if anything is unclear.

You should provide a written “management response” to each finding. This response should explain how you will correct the issue or reduce the risk going forward. The auditor will include your response in the final report.

You may also need to prepare a corrective action plan and a summary of prior findings, following federal requirements (2 CFR § 200.511). If you disagree with a finding, you should clearly explain why in your corrective action plan.

You are not required to submit management letters unless a federal funder requests them. If requested, you must provide them as part of your Single Audit documentation (2 CFR § 200.512(e)).

If a management letter is updated after submission, you should send the updated version directly to your federal funder.

If requested, your or your auditor must make audit documentation available to your cognizant or oversight agency and other authorized parties, such as funders. This may be needed for quality reviews, resolving findings, or oversight activities (2 CFR § 200.517(b)).

Yes. If requested, you or your auditor must make audit documentation available to your cognizant or oversight agency and other authorized parties, such as funders. This includes written management representations when they are part of the audit file (2 CFR § 200.517(b)).

This is the foundation of a smooth audit.

• Keep documentation organized
• Follow internal controls
• Track federal spending clearly
• Monitor grant rules

Doing these things all year long prevents surprises later.

This is a good time to:

• Identify all federal programs and grants.
• Review grant agreements and compliance requirements.
• Begin preparing or updating the Schedule of Federal Awards (SEFA) tracking schedule.
• Review procurement, payroll, and reporting procedures.
• Resolve any known accounting or documentation issues.

This is also when early coordination with the auditors often begins. The auditors may provide:

• A planning meeting or kickoff call
• A request list of documents needed for the audit
• Guidance on timelines and expectations
• Information about major programs likely to be tested

In the first month after your fiscal year closes, begin pulling together the Schedule of Federal Awards (SEFA).

• List all federal awards
• Confirm Assistance Listing Numbers
• Match totals to your accounting system

Month 1 to 2 is when communication really begins.

• Share your draft SEFA
• Provide requested documents
• Discuss any new federal programs
• Set the audit schedule

Auditors will tell you what they need and when they need it. Start gathering the information as soon as possible.

This is when auditors do the main testing. Ideally, it will be two to three months after your fiscal year closes.

• Answer auditor questions
• Provide extra documents quickly
• Clarify processes when needed

Fieldwork can be done on‑site or remotely, depending on the audit plan.

Good communication during fieldwork is very important. The municipality should respond to requests promptly and let the auditors know if additional time is needed to gather information.

If auditors find issues, they will share them with you. This should occur within a month or two of the auditors completing the field work.

• Review draft findings
• Prepare management responses and corrective action plans
• Discuss corrections

This is your chance to explain or correct anything before the report is final.

Remember, federal grant rules require you to promptly follow up and take corrective action on audit findings. This includes preparing a summary schedule of prior audit findings and a corrective action plan in accordance with 2 CFR § 200.511(b) and (c), respectively.

The auditors issue the final report within two to three weeks after you respond to the draft findings. Either the auditor or the municipality must submit the final report it to the federal clearinghouse. If you want the auditor to do this, be sure to include that task in your Single Audit Request for Proposals.

• Submit the Single Audit package to the Federal Audit Clearinghouse.
• Submit the Single Audit to any funders that have require it.
• Keep records for future audits.

The Single Audit package is due within the earlier of:

• 30 days after the audit reports are issued, or 
• 9 months after the end of the fiscal year being audited.

Internal controls are the rules and steps that help protect public money. Findings happen when controls are not followed or not written down.

Examples:

• One person handles everything (no checks and balances)
• Approvals are missing
• Bank accounts aren’t reconciled regularly

How to avoid it:

• Clearly assign responsibilities.
• Separate duties so no one person controls a whole process.
• Use clear approval steps for spending.
• Reconcile accounts every month.
• Write down procedures and follow them consistently.

Strong controls show that the municipality is careful and trustworthy.

Auditors often find that a municipality didn’t keep enough proof to show how federal money was used.

Examples:

• Missing invoices
• Not keeping copies of grant agreements, amendments, and approvals

How to avoid it:

• Keep all grant records in one place.
• Save receipts and invoices for every purchase.
• Maintain clear approval records for purchases and payments .
• Retain records according to grant requirements.

Good documentation is like keeping a trail of breadcrumbs — it helps auditors see exactly what happened.

Federal grants require detailed support for payroll costs charged to a grant. Findings may occur when timesheets or salary allocations are not properly documented.

Examples:

• No timesheets for activities charged to federal funding
• No support for payroll charges
• No documentation of payroll changes

How to avoid it:

• Document payroll time when employees work on federal programs - Timesheets need to indicate all time worked, not just the grant-funded time.
• Review payroll charges regularly.
• Document how payroll costs are allocated among programs.

Clear payroll records and accurate timekeeping reduce the risk of questioned costs or audit findings.

Federal grants have specific purchasing and bidding rules. Findings can occur if required quotes, bids, or conflict-of-interest disclosures are missing.

Examples:

• Not putting work out to bid when required
• Not including required contract clauses
• Not documenting all steps of a purchase to meet federal requirements

How to avoid it:

• Follow written procurement policies - You must follow federal procurement rules, and if your municipality's rules are stricter, you must follow those too.
• Document all quotes and bids received.
• Keep records showing how you advertised bids and why vendors were selected.
• Review federal procurement requirements before large purchases.

Strong procurement practices and clear documentation help demonstrate compliance with federal requirements and can help protect your municipality from fraud or abuse.

The Schedule of Federal Awards (SEFA) is one of the most common places where findings occur.

Examples:

• Wrong Assistance Listing Numbers (ALN)
• Missing federal programs
• Incorrect amounts reported
• Not identifying pass‑through funds

How to avoid it:

• List every federal program you spent money from.
• Double‑check Assistance Listing numbers. They should be included in your funding agreement.
• Match SEFA totals to your accounting system.
• Mark pass‑through funds clearly.
• Submit the SEFA to the State on time and amend it if you find errors.

A clean SEFA helps the audit start smoothly.

Most grants require regular reports to the state or federal government. Findings happen when these reports are late or incomplete.

How to avoid it:

• Create a reporting calendar with all deadlines.
• Assign responsibility to specific staff.
• Review reports before submitting them.

Each federal program has its own rules. Findings happen when a municipality doesn’t follow them.

Examples:

• Spending money on unallowed costs
• Not getting required quotes or bids
• Not meeting program requirements
• Not including Davis Bacon requirements in bid packages or contracts or not documenting required verifications

How to avoid it:

• Read the grant agreement and grant application guidance carefully.
• Check cost allowability before spending.
• Ask questions before charging unusual expenses to a grant.
• Follow procurement rules for purchases and contracts.

For federal funding compliance, it is better to ask permission than to seek forgiveness.

Good records make the audit smoother and faster.

• Grant documentation — Keep copies of grant agreements, award letters, budgets, and any rules tied to each grant.
• Spending records — Save invoices, receipts, contracts, payroll records, and anything that shows how money was spent.
• Policies and procedures — Have written policies and procedures for how you handle money, approvals, and reporting.
• Tracking system — Make sure you can clearly show which costs belong to which federal program.

Think of documentation as your “proof” that everything was done the right way.

Internal controls are the steps you take to prevent mistakes and protect public money.

• Segregation of duties — Try to make sure no one person handles everything from start to finish.
• Approval processes — Have clear rules for who can approve spending.
• Reconciliations — Regularly compare your records to bank statements and grant reports.
• Monitoring — Check throughout the year that spending follows grant rules.

These controls help show the auditors that the municipality is careful and responsible.

Federal grants have specific rules related to allowable costs, procurement, reporting, and record retention. Municipalities should review grant requirements and make sure staff understand them. 

Single Audits usually takes more preparation than expected. Starting early gives staff time to gather documents, ask questions, and address any issues before fieldwork begins. 

Many municipalities struggle to find an auditor because firms are very busy, and some do not respond to proposal requests. Starting early helps you avoid delays.

• Release your Request for Proposals (RFP) several months before year‑end. Ask firms to indicate their availability as part of their proposal.
• Advertise your RFP on the Vermont Bid Registry to increase your chances of finding an audit firm. Listings are free. Our Finding Auditors document has other ideas you can use.
• Sign an engagement letter early so your spot is reserved

Hiring early gives you more choices and helps ensure the audit can be completed on time.

The Schedule of Federal Awards (SEFA) is one of the most important parts of the single audit.

• List all federal programs — Include every federal award you spent money from during the year. Spending for FEMA Public Assistance awards should be based on when the funds are approved (i.e., approval of the Award Worksheet) since that is when FEMA actually obligates funds.
• Use correct Assistance Listing Numbers — These numbers identify each federal program. Look for them on your funding agreement.
• Report total federal spending — Show how much was spent for each program.
• Note pass‑through funds — If you received money through the state or another agency, mark it clearly.

A clean, accurate SEFA helps the audit start on the right foot.

Talking with your auditors ahead of time makes everything easier.

• Ask what they need — They can tell you exactly what documents to gather.
• Share any concerns — If something is unclear, it’s better to ask now than later.
• Set timelines — Agree on when information will be ready.