The Single Audit Threshold Is Now $1 Million: What Maryland Nonprofits Need to Know

For years, the rule of thumb was simple: spend $750,000 or more in federal awards in a fiscal year and your organization needs a Single Audit. That number has changed. The Office of Management and Budget's 2024 revision to the Uniform Guidance (2 CFR 200) raised the threshold to $1,000,000.

For many Baltimore and Maryland nonprofits that sit near the old line, this is good news. For others, the details of when the change applies and how expenditures are counted matter more than the headline.

What Changed

The same revision also changed several other thresholds that nonprofits deal with every day, including a higher de minimis indirect cost rate (15%, up from 10%) and a higher equipment threshold ($10,000, up from $5,000). Check the terms of each award, since the effective date for those provisions depends on when the award was issued or amended.

When the New Threshold Applies

The new threshold is tied to your fiscal year start date, not to when the audit is performed or when grants were awarded.

• Fiscal year July 1, 2024 to June 30, 2025: began before October 1, 2024. The $750,000 threshold still applies.
• Fiscal year October 1, 2024 to September 30, 2025: the first year under the $1,000,000 threshold for organizations on a federal-style fiscal year.
• Calendar year 2025: began January 1, 2025, so the $1,000,000 threshold applies.
• Fiscal year July 1, 2025 to June 30, 2026: $1,000,000.

In practice, the earliest audits under the new threshold cover fiscal years ending on or after September 30, 2025.

What Counts Toward the $1 Million

The test is federal expenditures, not awards received or cash collected. Add up everything your organization spent from federal sources during the fiscal year, including:

• Direct federal grants and cooperative agreements
• Federal funds passed through the State of Maryland, a county, the City of Baltimore, or another nonprofit
• Federal loans and loan guarantees (with specific rules for how balances count)
• Certain noncash assistance, such as donated federal surplus property

Pass-through funding is where organizations most often get surprised. A grant from a state agency or a larger nonprofit may be federal money with a federal Assistance Listing number attached. If it is, it counts.

What Doesn't Change

Raising the threshold doesn't reduce your compliance obligations on the awards themselves.

• Grant terms still apply. Allowable costs, procurement rules, reporting, and record retention are required whether or not you need a Single Audit.
• Funders can still require audits. Many foundations, state agencies, and pass-through entities require an annual financial statement audit regardless of the federal threshold.
• Maryland requirements may still apply. State grant agreements can carry their own audit requirements, and Maryland charitable registration can require an audit or review based on charitable contributions (government grants don't count toward that test). Confirm what applies to your organization with your auditor.
• Monitoring continues. Pass-through entities still monitor subrecipients, and a lighter audit requirement often means more desk reviews and documentation requests.

What to Do Now

1. Confirm your fiscal year start date and which threshold applies to your next audit.
2. Build or update your SEFA (Schedule of Expenditures of Federal Awards) monthly, not at year end. Tie it to the general ledger and identify every pass-through award by its Assistance Listing number.
3. Forecast federal expenditures for the current year. If you are close to $1 million, a large spending month in Q4 can tip you over.
4. Talk to your auditor early. Agree on the threshold that applies, the timing, and what they will need. If you no longer need a Single Audit, confirm whether funders still require a financial statement audit.
5. Keep the controls. The documentation that supports a Single Audit (time and effort reporting, procurement files, allowable cost reviews) is the same documentation your funders will ask for.

Where Organizations Get Tripped Up

• Counting awards received instead of expenditures
• Missing federal money that arrives through a state or local pass-through
• Assuming the new threshold applies to a fiscal year that began before October 1, 2024
• Letting the SEFA drift from the general ledger until the auditor arrives

Our free nonprofit finance SOP library includes procedures for grant reconciliation and reporting and the related month-end work.

How We Help

Harbor View works with Baltimore and Maryland nonprofits on SEFA preparation, Single Audit readiness, grant compliance, and the month-end close that supports them. When a finance seat is open during audit season, our interim accounting and finance staffing keeps the work on schedule.

Learn more about our nonprofit accounting and CFO services or book a nonprofit finance consult.

This article is general information, not legal or audit advice. Confirm how the Uniform Guidance applies to your organization with your auditor and your funders.