Businesses that accepted federal funds during COVID-19 could need a single audit performed by an independent CPA firm Sponsored
While federal financial assistance during the COVID-19 pandemic was a lifesaver for many businesses, in its wake, companies may be required to complete a single audit for the first time. But not all recipients of this funding will need a single audit. That’s why it’s important to contact your Certified Public Accountant (CPA) for guidance.
What is a single audit?
First things first. A single audit is not normally required for for-profit businesses. It’s a requirement by the U.S. Office of Management and Budget’s Uniform Grant Guidance (UGG) for a nonprofit or governmental entity that expends $750,000 or more of federal assistance during its fiscal year. The auditor, typically a CPA, reviews the organization’s financial statements and federal awards to ensure the money was spent according to its stipulations.
Because of monetary relief programs implemented by the federal government during the pandemic, many for-profit organizations that received federal funds are facing their first-ever single audit requirement. Some organizations may not have even been aware of the requirement when they accepted the funds. Those businesses must have crossed the $750,000 threshold in federal funding spending in a fiscal year.
Does a Paycheck Protection Program (PPP) loan trigger a single audit?
The short answer: No. But even experts admit that determining which funding triggers an audit can be confusing. Economic Injury Disaster Loans (EIDL) do.
To help navigate the requirements, the American Institute of CPAs (AICPA) Governmental Audit Quality Center (GAQC) released a chart matrix (PDF) describing which assistance programs trigger an audit and which do not, along with links to relevant agency information.
Also, even if a company is under the $750,000 threshold, administrative and other requirements of federal funding could apply even if a single audit is not needed. For example, the funds may only be spent for certain purposes.
Who can perform a single audit?
An independent auditor must perform an organization’s single audit through a licensed CPA firm enrolled in peer review; it cannot be done by an in-house auditor. Make sure you engage with a reputable CPA auditor who has experience and meets all the competency requirements established by the U.S. Government Accountability Office (GAO), including completion of all the education necessary to perform these types of engagements.
Still have questions? Contact a CPA for guidance, who can help you navigate the federal rules and point you in the right direction to find a licensed AND experienced auditor. There are many high-quality independent auditors in Virginia and surrounding metro areas. To search for a CPA in your area, visit vscpa.com/FindaCPA. For more information on single audits, visit vscpa.com/audit-resource-center.
The Virginia Society of Certified Public Accountants (VSCPA) is the leading professional association in the Commonwealth dedicated to empowering CPAs to thrive. Founded in 1909, the VSCPA has more than 13,000 members who work in public accounting, industry, government and education. For more information, please visit the Press Room on the VSCPA website at vscpa.com or call (800) 733-8272.