If you have ever wondered whether your city needs a Single Audit, you are not alone. The requirements can feel confusing at first, so here is a simple explanation.
What Is a Single Audit?
A Single Audit is a detailed financial and compliance review required when a city spends $1,000,000 or more in federal funds during a single fiscal year. This threshold was recently increased, which has provided additional flexibility for many small cities, but careful tracking of federal spending is still important. The audit reviews how federal dollars were used, whether federal requirements were followed, and whether the city’s internal processes are in place and working as intended. This audit looks at three key areas:
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How the federal dollars were spent
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Whether your city followed the federal rules tied to those funds
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Whether internal processes—like procurement and recordkeeping—are strong and compliant
Important: The threshold is based on federal dollars spent, not state funds or the overall project cost. Even a large project may not trigger an audit unless federal money is actually expended that year.
When Is a Single Audit Triggered?
Your city will need a Single Audit if federal spending meets or exceeds the $1,000,000 threshold. This is more common than many small cities realize, especially with today’s funding landscape. Construction invoices accumulate rapidly, and cities may cross the threshold before realizing it. As part of our work with Bollig clients, our Funding Team helps cities understand their funding mix, monitor federal spending, and plan ahead so audit requirements do not come as a surprise. Cities often hit that threshold because of:
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American Rescue Plan Act (ARPA) funding
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Community Development Block Grant (CDBG) or Small Cities Development Program (SCDP) projects
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Federal Emergency Management Agency (FEMA) reimbursements after storms or emergencies
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Federal infrastructure grants from federal agencies such as the U.S. Department of Agriculture (USDA), U.S. Department of Transportation (DOT), and U.S. Environmental Protection Agency (EPA)
How to Prepare for a Single Audit
Good preparation saves time, reduces stress, and helps your city stay compliant. Here are practical steps small cities can take.
1. Track grants closely.
Consistent tracking keeps surprises to a minimum. A simple Excel or Google Sheet works great for tracking the following:
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Award amounts
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Drawdowns
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Remaining balances
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Match requirements
2. Keep all documentation organized.
Good documentation is one of the biggest factors in a smooth audit. Save everything related to your federally funded project, including:
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Invoices
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Bids and procurement documents
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Signed agreements
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Drawdown requests
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Employee time tracking (if applicable)
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Communication with grant agencies
3. Make sure required policies are in place.
If you’re missing a policy, you’re not alone, many small cities are. Federal grants often require cities to have policies such as:
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Procurement policy
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Conflict of interest policy
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Record retention policy
4. Loop your auditor in early.
If you think you might hit the Single Audit threshold, give your city auditor a quick heads-up. It helps them plan their workload and gives you time to prepare.
5. Stay organized year-round.
Audit month should not mean digging through drawers or old email chains. A little monthly or quarterly tidying can save hours during audit season.
Why This Matters for Small Cities
Federal dollars can transform a community by helping you rebuild water systems, improve wastewater treatment, upgrade streets, or strengthen your airport. But they do require careful oversight. Understanding Single Audits helps your city:
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Protect federal funding
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Stay compliant with grant requirements
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Avoid delays or findings
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Keep projects moving smoothly
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Build confidence with agencies and residents
If you are unsure whether your project will cross the $1,000,000 threshold, or if you have questions about documentation, policies, or planning, this is something Bollig’s Funding Team works through with our clients as part of our project support. Because we specialize in working with small cities, we understand the realities of limited staff capacity and competing responsibilities. Our team helps clients make sense of funding requirements, plan ahead, and stay organized throughout the process. Interested in learning more about working with us? Contact us at 320-235-2555 or contact us here.
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