---
kind: "section"
citation: "31 U.S.C. § 7502"
title: "31"
title_heading: "Money and Finance"
number: "7502"
heading: "Audit requirements; exemptions"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/31/7502"
units:
  - "Subtitle V — General Assistance Administration"
  - "Chapter 75 — Requirements for Single Audits"
---

# §7502. Audit requirements; exemptions

- (a)
  - (1)
    - (A) Each [non-Federal entity](/usc/31/7501.md?p=a-13) that expends a total amount of [Federal awards](/usc/31/7501.md?p=a-4) equal to or in excess of $300,000 or such other amount specified by the [Director](/usc/31/6101.md?p=5) under [subsection (a)(3)](#a-3) in any fiscal year of such [non-Federal entity](/usc/31/7501.md?p=a-13) shall have either a [single audit](/usc/31/7501.md?p=a-18) or a [program-specific audit](/usc/31/7501.md?p=a-16) made for such fiscal year in accordance with the requirements of this chapter.
    - (B) Each such [non-Federal entity](/usc/31/7501.md?p=a-13) that expends [Federal awards](/usc/31/7501.md?p=a-4) under more than one [Federal program](/usc/31/7501.md?p=a-6) shall undergo a [single audit](/usc/31/7501.md?p=a-18) in accordance with the requirements of subsections [(b)](#b) through [(i)](#i) of this section and guidance issued by the [Director](/usc/31/6101.md?p=5) under section 7505.
    - (C) Each such [non-Federal entity](/usc/31/7501.md?p=a-13) that expends awards under only one [Federal program](/usc/31/7501.md?p=a-6) and is not subject to laws, regulations, or [Federal award](/usc/31/6401.md?p=5) agreements that require a financial statement audit of the [non-Federal entity](/usc/31/7501.md?p=a-13), may elect to have a [program-specific audit](/usc/31/7501.md?p=a-16) conducted in accordance with applicable provisions of this section and guidance issued by the [Director](/usc/31/6101.md?p=5) under section 7505.
  - (2)
    - (A) Each [non-Federal entity](/usc/31/7501.md?p=a-13) that expends a total amount of [Federal awards](/usc/31/7501.md?p=a-4) of less than $300,000 or such other amount specified by the [Director](/usc/31/6101.md?p=5) under [subsection (a)(3)](#a-3) in any fiscal year of such entity, shall be exempt for such fiscal year from compliance with—
      - (i) the audit requirements of this chapter; and
      - (ii) any applicable requirements concerning financial audits contained in Federal statutes and regulations governing programs under which such [Federal awards](/usc/31/7501.md?p=a-4) are provided to that [non-Federal entity](/usc/31/7501.md?p=a-13).
    - (B) The provisions of subparagraph (A)(ii) of this paragraph shall not exempt a [non-Federal entity](/usc/31/7501.md?p=a-13) from compliance with any provision of a Federal statute or regulation that requires such [non-Federal entity](/usc/31/7501.md?p=a-13) to maintain records concerning [Federal awards](/usc/31/7501.md?p=a-4) provided to such [non-Federal entity](/usc/31/7501.md?p=a-13) or that permits a Federal [agency](/usc/31/6401.md?p=1), [pass-through entity](/usc/31/7501.md?p=a-15), or the [Comptroller General](/usc/31/7501.md?p=a-1) access to such records.
  - (3) Every 2 years, the [Director](/usc/31/6101.md?p=5) shall review the amount for requiring audits prescribed under [paragraph (1)(A)](#a-1-A) and may adjust such dollar amount consistent with the purposes of this chapter, provided the [Director](/usc/31/6101.md?p=5) does not make such adjustments below $300,000.
- (b)
  - (1) Except as provided in paragraphs [(2)](#b-2) and [(3)](#b-3), audits conducted pursuant to this chapter shall be conducted annually.
  - (2) A [State](/usc/31/6201.md?p=2) or [local government](/usc/31/6302.md?p=3) that is required by constitution or statute, in effect on January 1, 1987, to undergo its audits less frequently than annually, is permitted to undergo its audits pursuant to this chapter biennially. Audits conducted biennially under the provisions of this paragraph shall cover both years within the biennial period.
  - (3) Any [nonprofit organization](/usc/31/7501.md?p=a-14) that had biennial audits for all biennial periods ending between July 1, 1992, and January 1, 1995, is permitted to undergo its audits pursuant to this chapter biennially. Audits conducted biennially under the provisions of this paragraph shall cover both years within the biennial period.
- (c) Each audit conducted pursuant to [subsection (a)](#a) shall be conducted by an [independent auditor](/usc/31/7501.md?p=a-8) in accordance with [generally accepted government auditing standards](/usc/31/7501.md?p=a-7), except that, for the purposes of this chapter, performance audits shall not be required except as authorized by the [Director](/usc/31/6101.md?p=5).
- (d) Each [single audit](/usc/31/7501.md?p=a-18) conducted pursuant to [subsection (a)](#a) for any fiscal year shall—
  - (1) cover the operations of the entire [non-Federal entity](/usc/31/7501.md?p=a-13); or
  - (2) at the option of such [non-Federal entity](/usc/31/7501.md?p=a-13) such audit shall include a series of audits that cover departments, [agencies](/usc/31/6401.md?p=1), and other organizational units which expended or otherwise administered [Federal awards](/usc/31/7501.md?p=a-4) during such fiscal year provided that each such audit shall encompass the financial statements and schedule of expenditures of [Federal awards](/usc/31/7501.md?p=a-4) for each such department, [agency](/usc/31/6401.md?p=1), and organizational unit, which shall be considered to be a [non-Federal entity](/usc/31/7501.md?p=a-13).
- (e) The auditor shall—
  - (1) determine whether the financial statements are presented fairly in all material respects in conformity with generally accepted accounting principles;
  - (2) determine whether the schedule of expenditures of [Federal awards](/usc/31/7501.md?p=a-4) is presented fairly in all material respects in relation to the financial statements taken as a whole;
  - (3) with respect to [internal controls](/usc/31/7501.md?p=a-10) pertaining to the compliance requirements for each [major program](/usc/31/7501.md?p=a-12)—
    - (A) obtain an understanding of such [internal controls](/usc/31/7501.md?p=a-10);
    - (B) assess control risk; and
    - (C) perform tests of controls unless the controls are deemed to be ineffective; and
  - (4) determine whether the [non-Federal entity](/usc/31/7501.md?p=a-13) has complied with the provisions of laws, regulations, and contracts or grants pertaining to [Federal awards](/usc/31/7501.md?p=a-4) that have a direct and material effect on each [major program](/usc/31/7501.md?p=a-12).
- (f)
  - (1) Each Federal [agency](/usc/31/6401.md?p=1) which provides [Federal awards](/usc/31/7501.md?p=a-4) to a [recipient](/usc/31/7501.md?p=a-17) shall—
    - (A) provide such [recipient](/usc/31/7501.md?p=a-17) the program names (and any identifying numbers) from which such awards are derived, and the Federal requirements which govern the use of such awards and the requirements of this chapter; and
    - (B) review the audit of a [recipient](/usc/31/7501.md?p=a-17) as necessary to determine whether prompt and appropriate corrective action has been taken with respect to audit findings, as defined by the [Director](/usc/31/6101.md?p=5), pertaining to [Federal awards](/usc/31/7501.md?p=a-4) provided to the [recipient](/usc/31/7501.md?p=a-17) by the Federal [agency](/usc/31/6401.md?p=1).
  - (2) Each [pass-through entity](/usc/31/7501.md?p=a-15) shall—
    - (A) provide such [subrecipient](/usc/31/7501.md?p=a-20) the program names (and any identifying numbers) from which such [assistance](/usc/31/6501.md?p=1) is derived, and the Federal requirements which govern the use of such awards and the requirements of this chapter;
    - (B) monitor the [subrecipient](/usc/31/7501.md?p=a-20)’s use of [Federal awards](/usc/31/7501.md?p=a-4) through site visits, limited scope audits, or other means;
    - (C) review the audit of a [subrecipient](/usc/31/7501.md?p=a-20) as necessary to determine whether prompt and appropriate corrective action has been taken with respect to audit findings, as defined by the [Director](/usc/31/6101.md?p=5), pertaining to [Federal awards](/usc/31/7501.md?p=a-4) provided to the [subrecipient](/usc/31/7501.md?p=a-20) by the [pass-through entity](/usc/31/7501.md?p=a-15); and
    - (D) require each of its [subrecipients](/usc/31/7501.md?p=a-20) of [Federal awards](/usc/31/7501.md?p=a-4) to permit, as a condition of receiving [Federal awards](/usc/31/7501.md?p=a-4), the [independent auditor](/usc/31/7501.md?p=a-8) of the [pass-through entity](/usc/31/7501.md?p=a-15) to have such access to the [subrecipient](/usc/31/7501.md?p=a-20)’s records and financial statements as may be necessary for the [pass-through entity](/usc/31/7501.md?p=a-15) to comply with this chapter.
- (g)
  - (1) The auditor shall report on the results of any audit conducted pursuant to this section, in accordance with guidance issued by the [Director](/usc/31/6101.md?p=5).
  - (2) When reporting on any [single audit](/usc/31/7501.md?p=a-18), the auditor shall include a summary of the auditor’s results regarding the [non-Federal entity](/usc/31/7501.md?p=a-13)’s financial statements, [internal controls](/usc/31/7501.md?p=a-10), and compliance with laws and regulations.
- (h) The [non-Federal entity](/usc/31/7501.md?p=a-13) shall transmit the reporting package, in an electronic form in accordance with the data standards established under [chapter 64](/usc/31/chstV/ch64.md) and which shall include the [non-Federal entity](/usc/31/7501.md?p=a-13)’s financial statements, schedule of expenditures of [Federal awards](/usc/31/7501.md?p=a-4), corrective action plan defined under [subsection (i)](#i), and auditor’s reports developed pursuant to this section, to a Federal clearinghouse designated by the [Director](/usc/31/6101.md?p=5), and make it available for public inspection within the earlier of—
  - (1) 30 days after receipt of the auditor’s report; or
  - (2)
    - (A) for a transition period of at least 2 years after the effective date of the Single Audit Act Amendments of 1996, as established by the [Director](/usc/31/6101.md?p=5), 13 months after the end of the period audited; or
    - (B) for fiscal years beginning after the period specified in [subparagraph (A)](#h-2-A), 9 months after the end of the period audited, or within a longer timeframe authorized by the Federal [agency](/usc/31/6401.md?p=1), determined under criteria issued under [section 7504](/usc/31/7504.md), when the 9-month timeframe would place an undue burden on the [non-Federal entity](/usc/31/7501.md?p=a-13).
- (i) If an audit conducted pursuant to this section discloses any audit findings, as defined by the [Director](/usc/31/6101.md?p=5), including material noncompliance with individual compliance requirements for a [major program](/usc/31/7501.md?p=a-12) by, or reportable conditions in the [internal controls](/usc/31/7501.md?p=a-10) of, the [non-Federal entity](/usc/31/7501.md?p=a-13) with respect to the matters described in [subsection (e)](#e), the [non-Federal entity](/usc/31/7501.md?p=a-13) shall submit to Federal officials designated by the [Director](/usc/31/6101.md?p=5), a plan for corrective action to eliminate such audit findings or reportable conditions or a statement describing the reasons that corrective action is not necessary. Such plan shall be consistent with the audit resolution standard promulgated by the [Comptroller General](/usc/31/7501.md?p=a-1) (as part of the standards for [internal controls](/usc/31/7501.md?p=a-10) in the Federal Government) pursuant to [section 3512(c)](/usc/31/3512.md?p=c).
- (j) The [Director](/usc/31/6101.md?p=5) may authorize pilot [projects](/usc/31/7102.md?p=4) to test alternative methods of achieving the purposes of this chapter. Such pilot [projects](/usc/31/7102.md?p=4) may begin only after consultation with the Chair and Ranking Minority Member of the Committee on Governmental Affairs of the Senate and the Chair and Ranking Minority Member of the Committee on Government Reform and Oversight of the House of Representatives.

## Source credit

(Added Pub. L. 98–502, § 2(a), Oct. 19, 1984, 98 Stat. 2329; amended Pub. L. 103–272, § 4(f)(1)(W), July 5, 1994, 108 Stat. 1363; Pub. L. 104–156, § 2, July 5, 1996, 110 Stat. 1399; Pub. L. 116–103, § 5(a)(1), Dec. 30, 2019, 133 Stat. 3270.)

## Notes

### Editorial Notes

### References in Text

The effective date of the Single Audit Act Amendments of 1996, referred to in subsec. (h)(2)(A), is the effective date of Pub. L. 104–156, which is classified generally to this chapter. See section 7506 of this title.

### Amendments

2019—Subsec. (h). Pub. L. 116–103 inserted “in an electronic form in accordance with the data standards established under chapter 64 and” after “the reporting package,” in introductory provisions.

1996—Pub. L. 104–156 reenacted section catchline without change and amended text generally, substituting present provisions for similar provisions relating to audit requirements and exemptions from such requirements for State and local governments receiving Federal financial assistance of $100,000 or more in any fiscal year and requiring audits to be conducted annually in most instances, to cover entirety of government operations, for reports to be made on audits in specified time period, and for appropriate corrective action plans to be submitted to Federal officials for any material State or local noncompliance with Federal laws and regulations.

1994—Subsec. (b)(2). Pub. L. 103–272, § 4(f)(1)(W), substituted “October 19, 1984” for “the date of enactment of this chapter” in subpar. (A) and for “such date” in subpar. (B).

Subsec. (d)(5), (6). Pub. L. 103–272, § 4(f)(1)(W)(iii), redesignated par. (6) as (5) and struck out former par. (5) which read as follows: “Each State or local government which, in any fiscal year of such government, receives directly from the Department of the Treasury a total of $25,000 or more under chapter 67 of this title (relating to general revenue sharing) and which is required to conduct an audit pursuant to this chapter for such fiscal year shall not have the option provided by paragraph (1)(A) for such fiscal year.”

Subsec. (g). Pub. L. 103–272, § 4(f)(1)(W)(iv), substituted “section 3512(c)” for “section 3512(b)”.

### Statutory Notes and Related Subsidiaries

### Change of Name

Committee on Governmental Affairs of Senate changed to Committee on Homeland Security and Governmental Affairs of Senate, effective Jan. 4, 2005, by Senate Resolution No. 445, One Hundred Eighth Congress, Oct. 9, 2004.

Committee on Government Reform and Oversight of House of Representatives changed to Committee on Government Reform of House of Representatives by House Resolution No. 5, One Hundred Sixth Congress, Jan. 6, 1999. Committee on Government Reform of House of Representatives changed to Committee on Oversight and Government Reform of House of Representatives by House Resolution No. 6, One Hundred Tenth Congress, Jan. 5, 2007. Committee on Oversight and Government Reform of House of Representatives changed to Committee on Oversight and Reform of House of Representatives by House Resolution No. 6, One Hundred Sixteenth Congress, Jan. 9, 2019. Committee on Oversight and Reform of House of Representatives changed to Committee on Oversight and Accountability of House of Representatives by House Resolution No. 5, One Hundred Eighteenth Congress, Jan. 9, 2023.