For board members transitioning from the for-profit sector to nonprofit oversight, federal funding regulations introduce a different standard of accountability. This oversight is driven by two primary sets of standards: the Yellow Book, which governs how auditors conduct their work, and the Uniform Guidance, which dictates how organizations must manage and spend federal funds. Under the recent 2024 Uniform Guidance updates, when an organization expends $1 million or more in federal awards within a single fiscal year—an increase from the previous $750,000 threshold—the audit shifts from a standard financial review to a Single Audit. For charter schools and human service organizations, the goal is about more than just a balanced budget; a single negative audit finding can jeopardize future grants, lead to federal clawbacks, and compromise public trust.
Mastering the Single Audit Framework
A Single Audit evaluates how federal funds are managed at every stage, including participant eligibility and procurement standards for hiring contractors. For a board, this creates a mandate to ensure management has moved beyond manual or reactive tracking toward a formal culture of compliance. This transition requires documented policies that accurately reflect daily operations. Boards must be confident that the organization is not only performing the work but also maintaining the paper trail required by federal regulators.
Successfully managing these rules requires a balance between federal mandates and board oversight. In sectors like charter schools, there is often a tension between the need to move quickly and the federal requirement for strict documentation. A successful Single Audit proves that the governance structure is strong enough to handle federal scrutiny without slowing down the organization’s actual work.
The SEFA: Your Single Audit Roadmap
Federal agencies rely on the Schedule of Expenditures of Federal Awards (SEFA) to see how an organization handles public money. It is more than just a list of grants; it is the core document of the Single Audit, showing the full scale of your federal funding and exactly how it is being used. Board members should verify that the grant reporting system and the general ledger reconcile. When these records are in sync, it proves to auditors that the data is accurate and the funds are being tracked properly.
Refining these systems ensures that federal and non-federal funds remain separate, which maintains clear visibility into how money is used. Strong internal controls provide the board with the necessary assurance that every dollar is spent exactly as intended and is easy to defend during an audit. This early precision prevents the compliance setbacks that often accompany federal monitoring visits.
Maintaining Good Standing through Timely Compliance
Federal reporting deadlines for the Single Audit are non-negotiable. A late filing labels the organization a high-risk auditee within the Federal Audit Clearinghouse. This designation automatically increases the scope, intensity, and cost of future audits for the next two years and serves as a major red flag for prospective grantors.
Completing the audit well before the federal deadline does more than just avoid a last-minute rush; it protects the organization’s reputation and safeguards its standing with grantors. By working closely with management to meet these milestones early, boards ensure that they stay on track and in good standing. At Calvetti Ferguson, we provide the specialized nonprofit reporting and proactive communication needed to keep these moving parts organized. When specialists manage the complexities of the Yellow Book, leadership is free to stay focused on the students, patients, and communities who depend on their success.
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