Auditing and Reporting Requirements: A non-profit corporation has multiple subsidiaries, including a for-profit subsidiary, that were consolidated for financial reporting purposes. Can the Single Audit of the non-profit corporation include the expenditures of federal awards of the for-profit subsidiary?

Yes, the non-profit corporation can include the expenditures of federal awards of its for-profit subsidiary in its Single Audit. Federal regulations at 45 CFR §75.501 or “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards” (Uniform Guidance) permitted a for-profit subsidiary to be included in the Single Audit, as long as the for-profit subsidiary’s operations were included in the consolidated financial statements and program expenditures were included in the Schedule of Expenditure of Federal Awards (SEFA). The inclusion of the for-profit subsidiary in the consolidated entity’s Single Audit would have met the for-profit entity’s responsibility for an audit under 45 CFR §75.501(i).

(Added 9/13/2021)