How the New Single Audit* Threshold May Affect Your Institution’s Audit Timeline

The federal government has raised the federal funds spending threshold that triggers a Single Audit* under Uniform Guidance (2 CFR 200) from $750,000 to $1 million, beginning with fiscal years starting on or after October 1, 2024.

Because all non-federal entities that receive federal awards must also meet this requirement, higher education institutions administering federal awards, including Title IV student aid funds, need to understand how this change may affect the timeline for their financial statement audit, or their financial statement and Single Audit. Below, we answer common questions to help you determine which deadlines apply to your institution and avoid compliance issues.

Do higher education institutions need to submit audited financial statements to the Department of Education (ED) if they don’t meet the Single Audit threshold?

Yes, they do. Even if your institution spends less than $1 million in federal funds, including Title IV funds, during the fiscal year, you still must meet ED’s separate reporting requirements, which can differ from the Single Audit requirements.

Institutions that aren’t required to have a Single Audit must still submit audited financial statements, including the expanded related party disclosures and the Financial Responsibility Supplemental Schedule, to ED. Keep in mind that this reporting deadline is not the same as the Federal Audit Clearinghouse deadline.

What happens if a higher education institution meets the Single Audit requirement one year, but not the next?

The biggest challenge for higher education institutions that exceed $1 million in federal spending one year and not the next is that ED’s reporting deadlines are different if a Single Audit is not required. Let’s look at how the regulations apply in scenarios above and below $1 million:

Federal spending above $1 million – The Single Audit submission deadline is the earlier of:

• 30 calendar days after receipt of the audit report, based on the auditor signature date, or
• Nine monthsafter the end of the audit period

For the purpose of establishing the date of the institution’s receipt of the audit report to determine whether a submission under the Single Audit Act meets the past performance requirements at 34 CFR 668.174(a)(3), ED will use the auditor signature date. If there are separate auditor signature dates on the audited financial statement opinion and the compliance audit opinion, ED will use the latter of the two dates to determine the submission deadline.

Federal spending below $1 million – When an institution spends less than $1 million in federal funds, ED will consider the institution’s eZ-Audit submission to be timely if it is completed by the earlier of:

• 30 days after the audit is issued, or
• Six monthsafter the fiscal year-end

Additional details are available in Volume 2, Chapter 4 of the Federal Student Aid Handbook.

Here’s an example of two years of reporting during which an institution’s federal spending decreases to below the Single Audit threshold:

In the year in which the institution exceeds the Single Audit threshold, it may have an additional three months to make its annual submission, depending on when the audit is completed.

Conversely, if the financial statement audit was set to allow submissions within nine months of the fiscal year-end but spending dropped below the $1 million threshold, thereby eliminating the need for a Single Audit, the institution must complete its annual financial statement audit in time to ensure the eZ-Audit submission occurs within six months of the fiscal year-end. The institution may need to move up the date of its financial statement audit to comply with ED’s earlier deadline.

Note that the eZ-Audit website will always show the nine-month submission deadline — even if the institution’s federal spending is below $1 million — because it calculates the deadline based on the institution’s fiscal year-end plus nine months, without taking into consideration the amount of federal awards spent.

What happens if an institution misses the deadline?

As outlined in 34 CFR 668.171(b)(4), an institution’s failure to submit compliance and financial statement audits by the date permitted and in the manner required under 34 CFR§ 668.23 may result in ED initiating adverse action against the institution, including terminating or revoking the institution’s program participation agreement for failure to meet the general standards of financial responsibility. The most frequent consequence we’ve seen is ED placing the institution on heightened cash monitoring.

How can our institution determine the correct reporting deadline each year?

We recommend that you review your expenditures for all federal awards as soon as possible after your fiscal year-end. Share this information with your auditors so they can determine which type of audit your institution needs and the related reporting deadline.

The revised Uniform Guidance spending limits bring significant reporting changes. Careful consideration and planning will help your institution meet these revised deadlines and stay compliant.

We can help your institution understand its reporting requirements and plan an audit timeline that supports timely reporting. Contact your advisor to discuss how these changes may affect your audit needs and submission deadlines.