Articles October 15, 2026 6 min read

Single Audit and Uniform Guidance: What FQHCs Need to Know Before Year-End

Government-Funded Programs Compliance and Advisory Services

Federally Qualified Health Centers (FQHCs) Services

Healthcare

Key Takeaways

The single audit threshold is $1,000,000 in federal expenditures; Federally Qualified Health Centers (“FQHCs”) should reassess before year-end based on expenditures rather than assumptions.

The 2024 Uniform Guidance revisions offer real relief, but only if your written policies are updated to use them.

Repeat FQHC findings most often arise in procurement, payroll, cash management, reporting and the sliding fee program.

For FQHCs, audits under Uniform Guidance, also known as single audits, often generate many questions and can potentially result in impactful findings. Early preparation and recurring attention can save time and help mitigate compliance issues. Section 330 grants, HRSA supplements and pass-through awards may all qualify as federal expenditures under 2 CFR Part 200.

With fall approaching, FQHCs with years ending June, September and December should start focusing on single audit requirements. Properly considering the items below can often determine whether a single audit runs smoothly and results in a clean opinion or becomes a last-minute scramble with potential reportable findings.

Does Your Health Center Still Need a Single Audit?

The threshold increased from $750,000 to $1,000,000 in federal expenditures for fiscal years beginning on or after October 1, 2024. FQHCs that previously cleared the old threshold should analyze the current expenditures (rather than assume) to determine if a single audit is still required. One often misunderstood concept is that the threshold is based on expenditures during the year, not grants awarded or funds received. As a best practice, update the SEFA monthly and reconcile expenditures to the related general ledger accounts.

Prebuild the Schedule of Expenditures of Federal Awards (SEFA) Before the Audit

The SEFA is the organization’s reporting of all federal activity and is made publicly available for review by cognizant and pass-through agencies. The audit firm also uses it to identify major programs, establish audit scope, and perform the Single Audit. Because omissions from the schedule are common, organizations should maintain a strong award-intake tracking mechanism to support a complete and accurate SEFA. If the SEFA is incomplete or significantly revised during the audit, the major programs selected may change, resulting in additional procedures, retesting and delays to the audit process. Additionally, if audit procedures determine a SEFA revision is necessary, material adjustments may also result in an internal control finding. Expenditures should be continuously tracked and traceable to the specific award, including the applicable Assistance Listing Number (ALN), through a subsidiary ledger or supporting schedule. This allows the finance team to easily prepare and review the SEFA in a timely and accurate manner. Determination of whether these pass-through awards qualify as federal expenditures for SEFA purposes depends on the original source of the funding, not the agency that granted the money to the FQHC. Once the population of awards has been identified, a properly developed SEFA should be reconciled to the trial balance and drawdown records before being provided to the external auditor.

2024 Uniform Guidance Revisions

Uniform Guidance underwent a major revision in 2024, resulting in several important updates for federal award recipients. Key changes for FQHCs included updates to indirect cost rates, equipment capitalization thresholds, and questioned cost reporting requirements. Indirect costs are shared expenses, such as administration and facilities, that are hard to assign to one grant. FQHCs without a negotiated indirect cost rate may charge a flat de minimis rate, which increased from 10 percent to 15 percent. Equipment and supplies thresholds rose from $5,000 to $10,000, and the questioned cost reporting threshold rose from $25,000 to $50,000. The indirect rate and equipment changes may only be applicable if your FQHC’s written policies properly adopt them. Applying the new federal 15 percent de minimis rate without updating your cost allocation policy may result in an unallocable cost and an audit finding.

Common Single Audit Findings for FQHCs

Procurement – For most non-payroll-related expenditures of federal funds, procurement procedures and activities are a common source of findings. The absence of a formal policy often results in common findings such as a lack of quotes or bids, a lack of documented review of price reasonableness or the inclusion of a vendor listed on the federal disbarment list.

Payroll – Although the most often utilized expense for federal funds, payroll does have its obstacles. Oftentimes, FQHCs allocate salaries based on internal budgets or the budgets used in the grant application process. However, this is not permitted. Payroll costs should reflect actual time spent, not projected time.
Cash management – Many grants for FQHCs are processed through grant drawdowns. Common pitfalls in this compliance area include drawdowns not directly allocable to immediate cash needs, or lack of support for the timing of those expenditures. Simply because the drawdown was approved and processed by CMS does not mean the drawdown is compliant with federal requirements.
Reporting – Audit findings often include federal financial reports that do not reconcile to accounting records or reports that are not filed by the required filing due dates. This often stems from a lack of internal controls over the filing process when a responsible employee is on paid time off or when there is turnover in key positions.
Sliding fee discount program – This special test under the 330-program grant is the source of many findings nationwide. Recurring themes include missing patient income and family size documentation, applying discounts that do not match the board-approved schedule and failing to approve an updated sliding fee schedule annually. Many root causes of findings in this area include frequent turnover among employees responsible for entering patient information. A key mitigation tool is to ensure policies for obtaining patient documentation and the appropriate sliding fee scale are posted where responsible employees can reference them day in and day out.

Actions to Take Before Year-End

Key actions before your fiscal year-end include reconciling drawdowns to the correct award, the general ledger and the SEFA while the data and grant sources are fresh in your mind. Also, review procurement and cash management policies to confirm they meet federal requirements and match actual practice. For regulators, an undocumented control does not exist. Therefore, confirming time and effort records support all federal program charges and that prior-year findings are resolved is critical. Finally, monitor federal reporting deadlines, including the federal single audit reporting deadline, which is the earlier of 30 days after the auditor’s report or nine months after year-end.

A clean single audit is largely decided before the auditors arrive. Maintaining an accurate SEFA, aligning policies with Uniform Guidance and documenting compliance throughout the year can help organizations approach the audit process with confidence and avoid time-consuming record reconstruction.

Have Questions or Need Guidance?

For help in preparing your SEFA, reviewing your policies, or addressing prior-year findings, reach out to a member of Withum’s Federally Qualified Health Centers Services Team.

Related Insights

View All Insights

Modern clinic management software displayed on a tablet screen with a blurred hospital background, showing charts, schedules, and patient records for efficient administration.

Revenue Cycle Optimization: A Strategic Response to FQHC Cost Pressures in 2026 and Beyond

As Federally Qualified Health Centers (FQHCs) navigate an increasingly complex landscape, revenue cycle optimization has become more critical than ever. Medicaid eligibility changes, federal funding concerns and evolving 340B compliance requirements are creating new administrative and operational challenges. By optimizing revenue cycle processes, FQHCs can protect reimbursement, improve financial performance and better position themselves for…

doctor holding a clipboard showing compliance.

Preparing for Your HRSA Operational Site Visit: A Readiness Checklist

For a Federally Qualified Health Center, the HRSA Operational Site Visit (OSV) is one of the most consequential compliance reviews in the grant cycle. Unlike a financial statement audit, the OSV evaluates whether the organization complies with the Health Center Program requirements that support its Section 330 funding. HRSA generally conducts an OSV once each…

Single Audit Readiness for FQHCs: Where Health Centers Continue to Get Tripped Up

For Federally Qualified Health Centers (FQHCs), single audit readiness—more precisely, readiness for an audit under Uniform Guidance—is no longer limited to the finance department. It is an organization-wide discipline that requires alignment across grants management, reimbursement, accounting, compliance, operations, and governance. Under Uniform Guidance, a non-Federal entity that expends $1,000,000 or more in Federal awards…