Common Single Audit Findings: What They Are and How to Prevent Them

Single audit findings are not just administrative paperwork. They are public records submitted to the Federal Audit Clearinghouse, visible to every federal agency that searches your organization’s audit history, reviewable by foundation funders who conduct due diligence, and potentially actionable by the agencies whose program requirements were not met. Understanding what generates findings is the foundation of a prevention-oriented compliance program.

Finding Severity Classifications

Single audit findings are classified into two dimensions: the type of issue and the severity.

Type of issue:

• Noncompliance: The organization failed to comply with a specific federal program requirement
• Material weakness in internal controls: A significant control failure that creates risk of material financial misstatement or material noncompliance
• Significant deficiency in internal controls: A less severe control gap that still requires attention

Severity for compliance findings:

• Material noncompliance: The compliance violation is material to the federal program — significant in dollar amount, pervasive in occurrence, or both
• Significant deficiency in compliance: A compliance issue that is less than material but significant enough to report

Findings can involve both internal control deficiencies and noncompliance simultaneously — a procurement failure that resulted from inadequate controls and also produced specific disallowed costs would generate findings in both categories.

The Top Finding Categories

Procurement and Suspension/Debarment

Procurement findings are consistently among the highest-frequency single audit findings. The two most common:

Inadequate competition documentation. 2 CFR 200.320 requires documented competitive procurement for purchases above specified thresholds (simplified acquisition threshold, micro-purchase threshold). Organizations that award contracts without obtaining competitive bids, or that obtain bids but do not document the solicitation process and award rationale, generate procurement findings. The documentation must exist — verbal quotes that were not written down do not satisfy the requirement.

Failure to check suspension/debarment. Federal regulations require that grantees verify that contractors and subrecipients are not suspended or debarred from federal programs before award. Verification is done through the SAM.gov exclusions database. Organizations that skip this check generate a finding even if the vendors checked would have been clean — the process failure is the finding, not just the outcome.

Subrecipient Monitoring

Organizations that receive federal funds and pass a portion to other organizations (subrecipients) are responsible for monitoring those subrecipients’ compliance. Common findings in this area:

No written subrecipient agreements. Subawards must be made through formal written agreements that include the federal award terms and the subrecipient’s compliance responsibilities.

No ongoing monitoring. Pass-through entities must perform desk reviews or site visits to verify that subrecipients are managing federal funds appropriately. Organizations that distribute subgrant funds and then have no monitoring process generate this finding.

No subrecipient audit review. Pass-through entities must obtain single audit reports from subrecipients that meet the $750,000 threshold and review them for findings that affect their program. Organizations unaware that their subrecipients may have their own audit requirements miss this consistently.

Reporting

Reporting findings occur when required reports are late, incomplete, or inaccurate:

Late SF-425 submissions. The most common reporting finding. Federal financial reports submitted after the due date generate delinquency flags and audit findings.

Inaccurate financial reports. SF-425 data that does not reconcile with the general ledger, incorrect cumulative vs. period figures, or errors in the indirect cost section.

Missing programmatic reports. Organizations that submit financial reports but miss programmatic report deadlines for the same grant period.

Cash Management

Federal regulations require grantees to minimize the time between drawing federal cash and disbursing it for allowable costs. Cash management findings arise when:

Excess cash held beyond immediate needs. Drawing down more federal cash than needed for disbursements in the near term, then holding the balance in an interest-bearing account, generates a cash management finding. The standard: cash should be drawn just in time for disbursement.

Interest earned on federal funds not remitted. Interest earned on federal cash advances above $500 per year must be remitted to the federal government. Organizations that draw in advance and earn interest without remitting it generate this finding.

Allowable Costs and Cost Principles

Allowable cost findings arise when expenditures charged to federal awards do not meet the three cost tests (allowable, allocable, reasonable) or when specifically unallowable costs are charged:

Entertainment costs charged to grants. The most straightforward disallowance — 2 CFR 200.438 explicitly prohibits entertainment costs, and they are found on grant ledgers regularly.

Inadequate time and effort documentation. Personnel costs are the single most common source of disallowed costs. When time records are missing, incomplete, pre-populated rather than after-the-fact, or not signed by the employee or a responsible supervisor, the personnel costs charged to the grant are at risk of disallowance.

Cost allocation methodology failures. Charging shared costs to grants without applying or documenting a reasonable allocation methodology.

Unallowable lobbying costs. Organizations with government affairs activities that did not maintain adequate separation between grant-funded and lobbying activities.

What Findings Mean for Future Grants

The consequences of single audit findings extend well beyond the corrective action process:

Enhanced monitoring. Federal awarding agencies that see findings in their programs typically impose enhanced monitoring conditions on subsequent awards — requiring more frequent financial and programmatic reports, site visits, and pre-approval of expenditures.

Special conditions on new awards. New grants from agencies with findings in their programs may include special conditions that impose additional requirements for the new award period.

Funding decisions. Competitive grant programs consider compliance history. A history of findings is a disadvantage in competition for limited funding.

Foundation due diligence. Many sophisticated private foundations now check the Federal Audit Clearinghouse as part of their grant due diligence. A finding is visible to any funder who looks.

Suspension and debarment. In extreme cases — particularly where findings reveal fraud, material mismanagement, or repeated noncompliance after prior notice — the federal government can suspend or debar an organization from receiving federal funds.

Writing a Corrective Action Plan That Works

A corrective action plan must be specific enough to be verifiable. Auditors who review the following year’s audit will test whether the CAP was implemented. Generic commitments do not satisfy this:

Weak CAP: “Management will improve procurement practices and ensure future compliance with federal requirements.”

Effective CAP: “We will implement a procurement checklist requiring documented competition for all purchases above $10,000, signed by the Finance Director before any contract is awarded. All existing procurement staff will complete the 2 CFR 200 procurement training module by June 30. The Finance Director will conduct a quarterly review of all procurements above $10,000 completed in the prior quarter beginning Q3 FY2026. Implementation is complete by June 30, 2026.”

The effective CAP identifies the specific policy change, who is responsible, how it will be operationalized, and when it will be done. When the following year’s auditor tests procurement, they can verify whether the checklist exists, whether it was used, and whether the quarterly reviews occurred.