Audit Readiness for Grant-Funded Broadband Projects: Where Providers Get Stuck

Why grant-funded broadband growth brings new audit risks

This is Article 1 of 5 in our series on navigating grant-funded broadband growth, covering grant audits, compliance triggers, and audit-readiness best practices. Upcoming articles focus on accounting challenges and scaling operations efficiently.

Broadband providers are navigating uncharted territory. As billions in public funding fuel infrastructure expansion, many private providers, particularly high-growth companies, are receiving government grants for the first time. These funds offer significant opportunity, but they also come with new compliance requirements that may be unfamiliar to companies accustomed to private capital. This article begins a series designed to help broadband providers stay grant-audit ready, confident, and in control as they grow.

Public dollars come with strings attached

Federal and state funds are flowing into broadband projects through programs like the Broadband Equity, Access, and Deployment (BEAD) Program, administered by the National Telecommunications and Information Administration (NTIA), or the Rural Digital Opportunity Fund (RDOF) at the federal level. State initiatives, such as the Virginia Telecommunications Initiative (VATI), also provide funding. For many broadband providers, this is their first experience working with government grants.

While these grants can accelerate expansion plans, they also introduce new obligations, including reporting requirements, cost tracking rules and the potential for a federal grant audit.

Grant audit definition (used throughout this series):

In federal compliance terms, audits of grant funds for nonprofits and government entities that meet certain thresholds are often called Single Audits, conducted under 2 CFR Part 200 (Uniform Guidance). In this series, we will use the term “grant audit” more broadly to include Single Audits, as well as the audit requirements that may apply to for-profit broadband providers receiving federal funds.

While some providers proactively plan for these audits, others may assume their accountant will address it later. The reality falls somewhere in the middle, and companies that prepare early will be in a much stronger position when oversight begins.

You do not have to be a government contractor to face government oversight

Many providers still view themselves as private companies, not government contractors. They may not have internal grant compliance staff or a CFO well-versed with 2 CFR Part 200, but once federal dollars are involved, oversight follows, even if the company has never formally worked as a government contractor.

Example scenario:
A provider receives funding through a state broadband office, unaware the dollars originated from a federal program. They spend the funds quickly to keep a construction timeline on track, without realizing they have triggered audit requirements. By the time anyone checks, project costs are already buried in a mix of general ledger accounts, contractor invoices, and change orders.

These outcomes are not indicative of poor decision-making but rather reflect a lack of early compliance awareness; grant oversight was not identified early enough to implement appropriate controls.

What triggers a grant audit?

In federal compliance terms, a grant audit is typically required when a non-federal entity spends above a certain threshold in federal funds during a fiscal year.

Key thresholds:

• $750,000 before October 2024
• $1,000,000 starting October 2024 (some programs may still use the older limit)

As we will cover in Article 3: Do You Actually Need a Grant Audit? Start Here, it is important to note that the requirement is based on what is spent, not what is awarded. For a detailed definition of what counts as federal funds expended, see 2 CFR §200.502.

While for-profit broadband providers may face slightly different audit requirements, the expectations for documentation, internal controls, and oversight remain significant.

Special consideration for NTIA-funded programs

Many broadband providers receive funding through the NTIA, which administers programs like BEAD within the U.S. Department of Commerce (DOC). The BEAD program is just one example of federal funding that carries audit requirements.

For for-profit entities receiving BEAD funds, the audit requirement is not a traditional Single Audit. Instead, if your federal grant expenditures exceed $750,000 in a fiscal year, you may be subject to:

1. A GAGAS-compliant financial-related audit of each DOC award or subaward,
2. Or a program-specific audit under 2 CFR § 200.507 (if eligible).

(See the BEAD NOFO – Audit Requirements, Section G, for full guidance.)

These audits require thorough documentation, cost tracking, and internal controls, even if they do not follow the full Single Audit structure. They adhere to the government’s Yellow Book standards, formally known as Generally Accepted Government Auditing Standards (GAGAS).

Even if your company stays under the threshold, many granting agencies require some form of financial reporting, agreed-upon procedures, or cost certifications. Preparing systems early reduces risk, builds credibility with funders, and simplifies future audit conversations.

What grant‑audit readiness really means

Being grant-audit ready is not about flawless financials. It means being able to demonstrate how grant funds were spent, documented, and reported in a way that stands up to scrutiny. A few questions to consider:

• Is each reimbursed expenditure supported by appropriate documentation?
• Are grant-funded costs tracked separately in your accounting system?
• Is there a written process for approving, recording, and reporting those costs?
• Do you understand which costs are allowable under the grant’s terms?

If these questions raise uncertainty, it may be time to build systems that can scale with your funding.

How we help broadband clients prepare

At Keiter, we work with clients receiving RDOF, VATI, tribal broadband, BEAD, and other federal funding. We help teams:

• Walk through grant tracking best practices
• Evaluate whether a grant audit may be required
• Assess cost allocation methods
• Review client-prepared financial schedules for consistency with applicable audit standards

If you have crossed the audit threshold or anticipate doing so soon, starting conversations with your auditor now gives you greater control over the outcome.

Looking Ahead

In upcoming articles, we will dive deeper into:

• What qualifies as federal spending
• How to structure cost tracking systems
• What auditors are really looking for

This series is designed to help you stay audit-ready while keeping the focus on growth and operational execution.

Need help evaluating your grant-audit readiness or preparing for a GAGAS audit? Start the conversation. Contact your Keiter Opportunity Advisor | Email | Call 804.747.0000 for more information.

Resources and Further Reading

• 2 CFR Part 200 – Uniform Guidance (eCFR)
  Governs administrative and cost principles for federal awards, including audit requirements. Key sections: §200.502 (Federal Awards Expended) and §200.507 (Program-Specific Audits).
• Office of Management and Budget (OMB) Compliance Supplement – Office of Federal Financial Management
  Official compliance guidance used by auditors and recipients of federal funding, including the most recent updates to federal grant audit thresholds.
• Federal Register – 2024 Uniform Guidance Revisions (PDF)
  Official announcement of the 2024 updates to 2 CFR Part 200, including the Single Audit threshold increase and effective dates.
• BEAD Notice of Funding Opportunity (NOFO) – Audit Requirements (Section G)
  Details audit requirements for recipients of BEAD funding, including when GAGAS-compliant or program-specific audits are required for for-profit recipients.