The $1 Million Single Audit Threshold: What Nonprofits Need to Know for 2026
- BryMar Crew
- Aug 3
- 6 min read
For nonprofits that receive federal funding, knowing whether your organization is subject to a Single Audit is an important part of annual financial planning.
This year (2026), there is a significant number to know: $1 million.
As part of its revisions to Uniform Guidance, the Office of Management and Budget (OMB) increased the federal expenditure threshold that triggers a Single Audit from $750,000 to $1 million.
For some organizations, that may mean a Single Audit is no longer required. For others, the requirement remains—but additional changes to Uniform Guidance may still affect how federal awards are managed, documented, and ultimately audited.
The key is understanding where your organization falls before audit season is underway.
Here’s what nonprofit leaders and finance teams should know.
First, What Exactly Changed?
Under 2 CFR 200.501, a non-federal entity that expends $1 million or more in federal awards during its fiscal year is generally required to have a Single Audit or program-specific audit for that year.
Previously, that threshold was $750,000.
Organizations that expend less than $1 million in federal awards are generally exempt from the federal Single Audit requirement. However, exemption from a Single Audit does not mean exemption from federal compliance responsibilities.
Records related to federal awards still need to be maintained and may be subject to review by federal awarding agencies, pass-through entities, or the Government Accountability Office.
That distinction matters.
A higher audit threshold may reduce the audit requirements for some organizations, but it doesn't eliminate the responsibility to maintain strong documentation, accurate financial records, and compliance with the terms of federal awards.
Does the New $1 Million Threshold Apply to Your Organization?
The revised Uniform Guidance requirements are effective for federal awards issued on or after October 1, 2024.
That timing can create some complexity.
Many nonprofits have multiple federal awards in progress at the same time. Some may have been issued before October 1, 2024, while others were issued afterward. Older awards may continue to operate under the previous guidance unless the awarding agency modifies the award to incorporate the updated requirements.
In other words, don't assume every federal award your organization receives is automatically governed by the same version of Uniform Guidance.
This is an important area to review as part of your audit planning.
Start your audit planning by creating or updating a complete inventory of your federal awards including:
The award date
Federal agency
Pass-through entity when applicable
Assistance listing number
Award amount
Expenditures during the fiscal year
That information can help your organization—and your auditor—determine the requirements that apply.
The Single Audit Threshold Isn't the Only Number That Changed
The increase to $1 million is receiving plenty of attention, but it was part of a broader update to Uniform Guidance.
Several other changes may be relevant to nonprofit finance teams.
Type A Program Threshold
The baseline threshold used in determining Type A programs increased from $750,000 to $1 million.
This is important because the Type A and Type B classifications are part of the risk-based process auditors use to determine which federal programs will be tested as major programs during a Single Audit.
For organizations with multiple federal programs, the change may affect which programs receive additional audit attention.
De Minimis Indirect Cost Rate
The de minimis indirect cost rate increased from 10% to up to 15% of modified total direct costs for eligible recipients and subrecipients that elect to use it.
For nonprofits without a negotiated indirect cost rate, this may provide an opportunity to recover a greater portion of the administrative and operational costs associated with carrying out federally funded programs.
Organizations considering the updated rate should review the requirements carefully and determine how the change fits within their federal awards and accounting practices.
Equipment Threshold
Uniform Guidance also increased the equipment threshold from $5,000 to $10,000.
That does not necessarily mean every nonprofit should immediately change its capitalization policy to $10,000.
Instead, management should consider its existing accounting policies, applicable financial reporting requirements, grant provisions, operational needs, and the revised federal guidance before determining whether a policy change is appropriate.
If a change is made, it should be formally approved, clearly documented, and consistently applied.
Fixed Amount Subawards
The revisions also increased the amount of fixed amount subawards that can generally be issued without prior written federal agency approval to $500,000.
Organizations that make subawards should understand how the updated rules interact with their existing grant-management and subrecipient-monitoring responsibilities.
Below $1 Million? Don't Stop Preparing
For organizations that previously fell just above the $750,000 threshold, the new limit may bring welcome relief.
However, there is an important distinction:
Not needing a Single Audit is not the same as not needing strong federal grant compliance.
If your organization receives federal funding, good financial practices remain essential.
That includes maintaining documentation to support expenditures, understanding allowable costs, reconciling grant activity to the general ledger, tracking federal expenditures accurately, monitoring subrecipients when applicable, and retaining records in accordance with award requirements.
These practices aren't simply about getting through an audit. They help leadership understand how funds are being used, support reliable reporting, and reduce surprises when questions arise from funders or pass-through entities.
Five Questions to Ask Before Your 2026 Audit
If your organization receives federal funding, now is a good time for management and the finance team to work through five questions:
1. How much did we actually expend in federal awards?
The Single Audit threshold is based on federal awards expended during the fiscal year, not simply the amount awarded or cash received.
That distinction can significantly change the calculation.
2. Do we have a complete Schedule of Expenditures of Federal Awards (SEFA)?
For organizations subject to a Single Audit, an accurate and complete SEFA is foundational to the audit process.
Waiting until fieldwork to identify missing federal programs, assistance listing numbers, or pass-through information can create unnecessary delays.
3. Which version of Uniform Guidance applies to our awards?
Review when each award was issued and whether any older awards were subsequently amended.
A nonprofit with several federal funding sources may need to account for different requirements across its award portfolio.
4. Have any of our policies changed because of the new guidance?
Management should consider whether changes to areas such as capitalization or indirect cost recovery are appropriate for the organization.
If policies change, make sure those decisions are properly approved and documented before they are implemented.
5. Are we documenting compliance throughout the year—or recreating it at audit time?
This may be the most valuable question of all.
Documentation is much easier to maintain when it is part of the normal accounting and grant-management process. Reconstructing approvals, reconciliations, cost allocations, or supporting documentation months later can turn an otherwise straightforward audit into a much more difficult process.
Use the Threshold Change as an Opportunity
The move from $750,000 to $1 million may change whether your organization needs a Single Audit.
However, it can also be a useful reason to look more broadly at how your organization manages federal funding. Asking these questions:
Are federal expenditures easy to identify in your accounting system?
Can your finance team readily produce the documentation supporting grant expenditures?
Do the general ledger, grant reports, and SEFA reconcile?
Are responsibilities for grant compliance clearly assigned?
Are policies current and consistently followed?
Those are valuable questions whether your organization expends $500,000 or $5 million in federal awards.
Strong processes make audits easier, but more importantly, they give nonprofit leaders greater visibility into the financial side of their mission.
Prepare Before Fieldwork Begins
Regulatory changes are much easier to address when they are identified early.
If your nonprofit is approaching the $1 million threshold - or if you're uncertain how the revised Uniform Guidance affects your upcoming audit - now is the time to start the conversation with your auditor.
At BryMar CPA, our audit and audit-preparation teams work with nonprofit organizations to help make the audit process clear, organized, and efficient.
We help organizations understand applicable audit requirements, identify documentation that will be needed, and prepare for the audit process while maintaining the independence required of our audit services.
The goal shouldn't be to figure everything out once fieldwork starts.
Know what applies. Know what you need. Give your team enough time to prepare.
Connect with the BryMar team to discuss your organization's upcoming audit and what the new $1 million Single Audit threshold could mean for you.
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