Mandates a Single Audit or Program-Specific Audit for entities expending $1,000,000 or more in Federal awards during a fiscal year.

Determines the legal trigger for high-level oversight; failure to conduct this audit is a material breach of the grant agreement.

Details how to calculate the value of Federal awards used (including loans, property, and interest subsidies) to see if the $1M threshold is met.

Ensures accurate reporting of total federal exposure; miscalculating this figure can lead to missed audit requirements and subsequent legal penalties.

Clarifies that the Single Audit is intended to meet all Federal audit needs, though agencies may conduct additional 'for cause' reviews.

Reduces administrative burden by providing a 'standard' audit that all agencies must generally accept as the primary compliance check.

Allows for a specific program audit instead of a full Single Audit when a recipient expends Federal awards under only one Federal program.

Provides a streamlined and less costly compliance path for specialized or smaller entities with a narrow scope of federal funding.

Requires the recipient to procure the audit, prepare financial statements, and follow up on audit findings.

The mechanical anchor of compliance; the recipient—not the auditor—is legally responsible for the accuracy of the financial reporting.

Mandates the preparation of a Schedule of Expenditures of Federal Awards (SEFA) and a summary of prior audit findings.

The SEFA is the primary document used by auditors to verify that every federal dollar is accounted for and spent on eligible activities.

Requires the auditee to prepare a corrective action plan for current findings and a summary schedule of prior findings.

Ensures that systemic management failures are actually fixed; repeating the same finding in subsequent years can lead to the termination of funding.

Sets strict deadlines for submitting the audit report to the Federal Audit Clearinghouse (FAC) (earlier of 30 days after receipt or 9 months after fiscal year end).

Late submission is a major red flag for federal agencies and can trigger immediate suspension of all current and future award payments.

Defines the roles of the 'Cognizant Agency' for audit and the 'Oversight Agency' for audit.

Provides a clear hierarchy of federal oversight, ensuring the recipient knows which specific agency has the final authority on their audit status.

Requires the audit to be conducted in accordance with GAGAS and cover the entire organization's financial operations and compliance.

Ensures the audit is deep enough to identify fraud or waste across the whole entity, protecting the integrity of the federal grant system.

Specifies that auditors must report significant deficiencies, material weaknesses, and all questioned costs exceeding $25,000.

The high-stakes results of the audit; findings in this category often lead to mandatory cost disallowances and repayment of funds.

Requires the Federal agency to issue a decision on audit findings within six months of the audit report being accepted.

Provides the final 'verdict' on whether questioned costs are officially disallowed and establishes the repayment timeline for the recipient.