31 U.S.C. § 7502 — Audit requirements; exemptions

(a)(1) Entities spending $300,000 or more in federal awards in a fiscal year, or another amount the Director sets, must have a single audit or program-specific audit: (A) is the general rule; (B) an entity with more than one federal program must get a single audit; (C) an entity with only one program, not otherwise required to get a financial statement audit, may choose a program-specific audit instead.
(2)(A) Entities spending less than $300,000, or the Director's other amount, are exempt that year from (i) this chapter's audit requirements and (ii) other federal financial-audit requirements tied to those programs. (B) This exemption doesn't excuse the entity from keeping required records or from letting federal agencies, pass-through entities, or the Comptroller General access those records.
(3) Every 2 years, the Director must review the $300,000 threshold and may adjust it in accordance with the purposes of this chapter, but may not adjust it below $300,000.

(b)(1) Audits are normally annual. (2) A state or local government whose constitution or law, as of January 1, 1987, required less-frequent audits may audit biennially, covering both years each time. (3) A nonprofit that did biennial audits for every two-year period ending between July 1, 1992, and January 1, 1995, may also audit biennially, covering both years.

(c) Audits must be done by an independent auditor following government auditing standards; performance audits aren't required unless the Director authorizes them.

(d) A single audit must either (1) cover the entire entity, or (2), at the entity's choice, be a series of audits covering its departments or units that handled federal awards, each treated as its own "non-Federal entity" for audit purposes.

(e) The auditor must (1) check whether the financial statements are fairly presented under standard accounting rules; (2) check whether the schedule of federal award spending is fairly presented relative to those statements; (3) for internal controls on each major program's compliance requirements, (A) understand the controls, (B) assess control risk, and (C) test the controls unless they're clearly ineffective; and (4) determine whether the entity complied with the laws, regulations, and grant or contract terms that materially affect each major program.

(f)(1) Each federal agency giving awards must (A) tell recipients the program names, ID numbers, and requirements that apply, and (B) review recipient audits to check whether they've properly fixed audit findings. (2) Each pass-through entity must (A) give subrecipients the same program information, (B) monitor subrecipients through site visits, limited audits, or other means, (C) review subrecipient audits for corrective action, and (D) require subrecipients to let its independent auditor access their records as needed.

(g)(1) The auditor must report results following the Director's guidance. (2) For a single audit, the report must summarize results on the entity's financial statements, internal controls, and legal compliance.

(h) The entity must electronically submit its full reporting package, meaning financial statements, schedule of federal awards, corrective action plan, and audit reports, to a federal clearinghouse the Director designates, and make it public within the earlier of (1) 30 days after getting the auditor's report, or (2)(A) 13 months after the audit period ends, during a transition period after the 1996 Single Audit Act Amendments, or (B) for later years, 9 months after the period ends, unless the agency allows more time because 9 months would be an undue burden.

(i) If an audit finds problems, such as material noncompliance with a major program's requirements or weak internal controls, the entity must submit a corrective action plan to fix them, or explain why no correction is needed, consistent with the Comptroller General's audit-resolution standards.

(j) The Director may authorize pilot projects testing alternative ways to meet this chapter's goals, but only after consulting the top members of the relevant Senate and House committees.