Audit Readiness: Navigating the New Uniform Guidance for a Flawless Single Audit

What Is The New Uniform Guidance?  

Federal grant rules just changed, and the ripple effects touch budgets, audits, and day-to-day controls. We sit down with audit director Sharon Blazejowski to translate the new uniform guidance into plain language and practical next steps for nonprofits, governments, and charter schools. From the raised single audit threshold to the higher de minimis rate and equipment capitalization changes, we connect each policy shift to what it means in your ledger, your policies, and your audit file.

We break down which entities may exit single audit requirements at the one million dollar mark and why “less audit” does not mean “less compliance.” Sharon explains how the Type A program threshold affects major program selection and how to recalibrate testing plans. We detail how to correctly apply the 15% de minimis rate, adjust budgets, and avoid overbilling. We also cover the explicit push to fold cybersecurity into internal controls, including access control, incident response, and vendor risk where federal information is involved.

If you touch federal funds, you’ll leave with a clear picture of audit readiness: a running SEFA tied to the general ledger, mapped OMB requirements to controls, tested eligibility and procurement, and documented subrecipient monitoring with suspension and debarment checks. We share the most common pitfalls—stale policies, weak procurement documentation, and unclear cost allowability—and show how finance and grants teams can work together with better segregation of duties, monthly reconciliations, and grant management software. Want a calmer, cleaner audit and stronger compliance posture all year long? Press play, then subscribe, share with your grants team, and leave a review to tell us what topic you want next.

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Transcript

Welcome And Guest Introduction

SPEAKER_00 0:01

Welcome to the Knowing What Counts Podcast, the place where expert guidance makes smart financial decisions. Whether you're a high net worth individual or a thriving business, the experts at MPCPAs are here to help you protect and optimize your wealth. Let's get started. Because success begins with knowing what counts.

SPEAKER_01 0:25

With new federal guidance in play, being audit ready isn't just smart, it's essential. Welcome back, everyone. I'm Sophia Yvette, co-host and producer, back in the studio with Sharon Blaze Jowski, audit director here at MPCPAs. Hi Sharon, how's it going today? Good, how are you? Good. Now we are so excited to be with you today. Now, Sharon, before we get started, why don't you introduce yourself to the audience?

SPEAKER_02 1:01

Okay. Hello, everyone. I'm Sharon Blezjowski. I'm an audit director with the firm, and I'm responsible for audits of small to medium-sized businesses, um, review and compilation engagements. I specialize in charter schools and nonprofits and single audits.

SPEAKER_01 1:23

So, Sharon, what does the new uniform guidance entail and why were these changes made?

SPEAKER_02 1:31

Okay, so the new uniform guidance takes place for fiscal years beginning October 1st, 2024, which means for any audit year end of 930, so September 30th, 2025, and after, we'll have an audit in accordance with the new uniform guidance. So the new uniform guidance simplifies federal grant administration by raising key thresholds. Um, the minimis cost rate was increased to 15%, and they also rewrote sections in plain language to reduce burden. These changes were made to address administrative priorities, streamline processes, improve clarity, and promote greater efficiency and equity in the management of federal funds.

SPEAKER_01 2:24

So, Sharon, what are the most significant changes organizations should be aware of?

SPEAKER_02 2:32

So the prior threshold for requiring a federal audit in accordance with uniform guidance was if the entity had federal funds over$750,000. That threshold has been raised to a million dollars, meaning any organization spending less than that million dollars on federal fundings will no longer require a single audit. Type A programs, uh the threshold was also increased from$750,000 to a million dollars. Your type A program is always your major program that is tested, so that will shift some testing with major programs. Also, the de minimis cost rate will increase from 10% to 15%, allowing entities without a negotiated cost rate to cover more of their administrative costs. Also, the equipment threshold was increased from$5,000 to$10,000 for capitalizing equipment purchases. And recipients must also now implement enhanced cybersecurity measures as part of their internal controls to protect federal information.

Impact On Nonprofits And Governments

SPEAKER_01 3:51

All right, Sharon. So how do these changes impact entities preparing for a single audit, especially nonprofits and governments?

SPEAKER_02 3:59

So since the threshold was changed from$750,000 to a million dollars, those smaller entities will no longer be in the pool for single audits. However, they should still stay compliant with their grant awards and programs. Larger entities will still need a single audit. Since the type A program was changed to a million dollars, this may shift the major programs that they have being tested. Also, they'll want to make sure that the de minimis cost rate is calculated properly because it's going from 10% to 15%. They'll also want to change their capitalization policies as the threshold is going from$5,000 to$10,000. And they will want to take a look at their cybersecurity measures and incorporate those measures into their internal controls.

What True Audit Readiness Requires

SPEAKER_01 4:59

Now, what does true audit readiness look like under the new uniform guidance?

SPEAKER_02 5:07

So entities want to make sure that they maintain a running, accurate schedule of federal awards that is reconciled to the general ledger. They want to keep clear records for cost allowability, time and effort tracking, and program-specific requirements. They want to document sub-recipient risk assessments and oversight activities. They should map federal compliance requirements from the OMB compliance supplement to internal controls. They should test and document their key controls over eligibility and reporting and procurement. They should ensure financial accuracy and strong, well-documented internal control frameworks. They should have clear roles, approval chains, and responsibilities for grant management.

SPEAKER_01 5:56

Now, what are the most common pitfalls or compliance gaps organizations face during these transitions?

SPEAKER_02 6:05

So organizations might have a lack of written policies. So they want to make sure they have written policies for internal controls, allowable costs, and procurement. They might have outdated policies due to the new thresholds and requirements. They want to make sure their policies are updated to those new requirements. They want to make sure they're allocating their allowable costs properly. They want to make sure they update their procurement standards. They want to make sure they train staff and communicate between grant managers and their finance people. And they want to be proactive with clear documentation.

SPEAKER_01 6:52

Now, from the auditors' perspective, what areas are receiving increased scrutiny or focus?

SPEAKER_02 7:01

So your subrecipient monitoring will receive um new scrutiny as the auditors will verify that the PTEs confirm potential subrecipients are not suspended or debarred from receiving federal funds. We'll look at internal control documentation and implementation for the new uniform guidance. And auditors will also be checking that they have a cybersecurity policy that is incorporated into their internal control system.

SPEAKER_01 7:42

Now, how can finance and grants management teams work together to ensure a smooth audit process?

SPEAKER_02 7:52

So the grants management team and the finance team will want to manage establish joint policies and procedures to make sure they're working together and that everything is in compliance with the grants. They'll want to implement robust internal controls again to make sure that the internal controls over compliance match what the uniform guidance is looking for. They want to make sure they'll have segregation of duties between everyone in the organization. They really want to make sure that their schedule of federal awards is reconciled to their general ledger on a timely basis, on a regular basis. And they should uh make sure everyone has proper training on the grants to make sure that they're in compliance with all of the grants conditions and requirements.

Tools And Year-Round Best Practices

SPEAKER_01 8:50

So, Sharon, what tools or best practices can help organizations stay compliant and organized year-round?

SPEAKER_02 9:00

So there is software that organizations could purchase to keep track of their grants separately. We think every grant should be kept separately in a system to make sure all the costs are charged properly to the grant, that there's no overbillings.

SPEAKER_01 9:21

So, Sharon, what's one key takeaway you'd like listeners to remember about navigating the new uniform guidance?

SPEAKER_02 9:29

So, entities should make sure that um they update all of their internal control policies to um be in line with the new uniform guidance. They should make sure that their de minimis cost rate, um, if they have one, is now 15%. They should make sure that their budgets reflect that. And they should make sure that all their scheduled federal awards agree to their general ledger and that they don't have any overbillings or unallowable costs.

SPEAKER_01 10:06

Well, Sharon, we'll see you next time on Knowing What Counts Podcast. Thank you.

SPEAKER_00 10:14

Thanks for listening to the Knowing What Counts Podcast. Ready to optimize your wealth and protect your future? Visit the MPgroupCPA.com or call 413 739 1800 to connect with our team of experts. Remember, success is about knowing what counts.