For fiscal years beginning on or after October 1, 2024, the single audit threshold increases to $1,000,000 in federal expenditures. Non-federal entities (nonprofits and local governments) expending this amount or more in federal funds (direct or pass-through) must undergo a Single Audit for fiscal years ending on or after September 30, 2025.
If your agency expends $1,000,000 or more in federal awards issued on or after October 1, 2024, then you must undergo a Single Audit for fiscal years ending on or after September 30, 2025. If your agency's federal awards were issued before October 1, 2024, the previous threshold of $750,000 still applies.
The tax audit limit for AY 2025-26 in India is ₹1 crore for businesses (₹10 crore if cash ≤ 5%) and ₹50 lakh for professionals, with special rules under 44AB(d) and 44AB(e) for presumptive schemes.
The $1 million single audit threshold is effective for federal awards that were issued after October 1, 2024, meaning the new threshold is effective for fiscal years that end on or after September 30, 2025. This is a 33% increase from the previous $750,000 threshold that had been in place since 1997.
In both 2025 and 2026, non-federal entities that accept $1 million or more in federal assistance must complete an annual single audit. Before 2025, the single audit threshold was $750,000. Single audit rules apply regardless of whether your organization receives federal funds directly or indirectly.
What is the 5% Rule for Materiality? Under US GAAP, the 5% rule suggests that if a misstatement is less than 5% of a financial statement item, it is generally considered not material. However this is not an absolute rule and must be applied with professional judgment.
(a) Audit required. A non-Federal entity that expends $1,000,000 or more during the non-Federal entity's fiscal year in Federal awards must have a single or program-specific audit conducted for that year in accordance with the provisions of this part.
Understanding the changes to audit exemption in 2025
The changes are designed to reduce reporting requirements and simplify financial reporting. Companies that meet the new thresholds will be exempt from statutory audit requirements.
For financial years that begin on or after 6 April 2025
Your company may qualify for an audit exemption if it has at least 2 of the following: an annual turnover of no more than £15 million. assets worth no more than £7.5 million. 50 or fewer employees on average.
The deadline, which was earlier September 30, 2025, has been extended to October 31, 2025. CBDT issued the order for assessees covered via clause (a) of Explanation 2 to section 139(1)—i.e., those required to furnish a report of audit under any provision of the Income-tax Act (other than Section 92E).
Generally, the IRS can include returns filed within the last three years in an audit. If we identify a substantial error, we may add additional years. We usually don't go back more than the last six years. The IRS tries to audit tax returns as soon as possible after they are filed.
The 'specified date' of furnishing of the report of audit under the provisions of the Income-tax Act, 1961, for the Previous Year 2024-25 (Assessment Year 2025-26) is further extended to 10th November 2025.
Fewer 401(k) Plans Will Require A 5500 Audit Starting in 2023. 401(K) plans with over 100 eligible plan participants are considered “large plans” in the eyes of DOL and require an audit to be completed each year with the filing of their 5500. These audits can be costly, often ranging from $8,000 - $30,000 per year.
Not reporting all of your income is an easy-to-avoid red flag that can lead to an audit. Taking excessive business tax deductions and mixing business and personal expenses can lead to an audit. The IRS mostly audits tax returns of those earning more than $200,000 and corporations with more than $10 million in assets.
Audit risk in 2025 is driven by both individual behavior and IRS algorithms. Common triggers include high income, unusually large deductions, unreported freelance income, filing errors, and business classification issues.
Any business where the total sales, turnover, or receipts exceed Rs. 1 crore in a year should have a tax audit in India. As a professional, receipts over Rs. 50 lakh makes you eligible for a tax audit.
Stay focused on financial reporting and related internal control risks—job number one. Clarify the role of the audit committee in the oversight of generative AI (GenAI), cybersecurity, and data governance. Understand how technology is affecting the finance organization's talent, efficiency, and value-add.
The $1 million Single Audit threshold is effective for fiscal years that begin on or after October 1, 2024. In other words, the new threshold is effective for fiscal years that end on or after September 30, 2025.
Entities that spend federal grant funds are required to submit an audit if they meet the following spending thresholds: $750,000 or more for Fiscal Years starting before October 1, 2024. $1,000,000 or more for Fiscal Years starting on or after October 1, 2024.
Materiality thresholds are mutually agreed upon amounts that are used as a guide for both the IRS and the taxpayer in determining which issues and transactions to review. There are separate thresholds for permanent and timing items and tax credits.
Audit thresholds refer to the financial benchmarks set by the government, which determine whether a company is required to undergo a statutory audit. Currently, a business is required to have an audit if it meets two out of three of the following criteria: An annual turnover of more than £10.2 million.
The materiality threshold is defined as a percentage of that base. The most commonly used base in auditing is net income (earnings / profits). Most commonly percentages are in the range of 5 – 10 percent (for example an amount <5% = immaterial, > 10% material and 5-10% requires judgment).