2 CFR 200 Audit Prep Checklist

Why This Checklist Exists

Single audits test a defined set of compliance requirements. The OMB Compliance Supplement identifies which requirements apply to each federal program and what auditors are expected to test. This checklist maps those requirements to the documentation you need to have in hand — not assembled from scratch when fieldwork begins, but maintained as a running record throughout the year.

The threshold reminder: your organization is subject to a single audit when it expends $1,000,000 or more in federal awards in a fiscal year. This threshold was updated from $750,000 in the 2024 revisions to 2 CFR Part 200, effective for fiscal years ending September 30, 2025 or later.

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Section 1: Restricted Fund Traceability

Auditors test that federal funds were spent on allowable activities within the terms of the award. Every expenditure charged to a federal grant must trace back to a source document that demonstrates: what was purchased, that it benefited the funded program, and that it was allocable to the grant budget category.

Checklist:

• Grant-specific expenditure reports are run monthly from the accounting system Why auditors check this: They need to trace every expenditure from the general ledger to the underlying source document. If monthly reports do not exist, the audit trail is reconstructed from scratch.

• Each active grant has a budget-to-actual comparison updated at least monthly Why auditors check this: Budget variances signal potential rebudgeting without prior approval. Overspent categories are a disallowance risk.

• Indirect costs are applied at the correct approved rate (NICRA or 10% de minimis) using the correct base Why auditors check this: Incorrect indirect cost rate application — wrong rate, wrong base, or inconsistent application — is a common questioned cost source.

• All expenditures are coded to the correct grant and budget category at the time of entry Why auditors check this: After-the-fact recoding of transactions is a red flag for compliance staff trying to make the books match the budget.

• Any budget modifications exceeding the allowable rebudgeting threshold were pre-approved by the funder in writing Why auditors check this: Expenditures in categories that were modified without required prior approval are disallowable, even if the cost itself is allowable.

• Program income, if any, was reported correctly and applied per the method specified in the award Why auditors check this: Program income is a testable compliance requirement. Unreported or misapplied program income is a finding.

• Equipment purchases (unit cost $5,000+) are in the equipment inventory with acquisition cost, location, and condition Why auditors check this: Equipment management is tested in the Equipment and Real Property Management compliance requirement.

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