Broadband Providers: Do You Actually Need a Grant Audit?

Understanding Grant Audit Thresholds for Broadband Providers

This is Article 3 of 5 in of our series on navigating grant-funded broadband growth, covering grant audits, compliance triggers, and audit-readiness best practices. Upcoming themes focus on accounting challenges and scaling operations efficiently.

Not every broadband provider receiving a federal or state grant needs a grant audit.

That often comes as a surprise to private companies. The assumption tends to be: “We received federal money, so we must be subject to a special audit,” but the rules are more specific, and missing the details can lead to unnecessary cost delayed compliance.

If your company is building a network with public funding, here is how to determine whether a grant audit is truly required, and what to do if it is not. A “grant audit” reviews whether your internal controls, documentation, and spending practices comply with federal rules.

Does a grant audit apply to you? Five questions to ask

1. Are you a “non-federal entity”?
   Most broadband providers, including for-profit private companies, qualify as non-federal entities under 2 CFR Part 200 (Uniform Guidance). The term simply refers to any organization that is not a federal agency.
2. Did you spend $750,000 (or $1 million) in federal awards this year?
   The audit requirement is based on spending, not the award amount. For example, if you were awarded $2 million but only spent $500,000 this year, you are under the threshold. For most new federal awards made after October 1, 2024, the threshold increases to $1 million. Some older programs may still apply the $750,000 threshold. Review your award documents carefully.

Be sure to include:

• Direct costs paid by your company
• Pass-through funds from a state or tribal entity

• Any subawards you made to others

If you are unsure whether a funding source is federal or state or which threshold applies, check your award document. Many state programs are passing through federal funds, and those could still count toward the threshold.

3. Are you a subrecipient, or just a contractor?
   Receiving funds through a lead partner or state agency does not automatically make you exempt. If you are classified as a subrecipient, audit requirements may apply.

On the other hand, if you are just a contractor or vendor, performing services under someone else’s grant, you may be exempt. The distinction depends on your responsibilities, not just your title in the agreement.

A subrecipient:

• Carries out a federal program’s purpose
• Has discretion over how funds are used
• Must follow federal compliance rules

A contractor (or vendor):

• Provides goods or services commercially
• Is paid based on deliverables
• Is not directly subject to Uniform Guidance

If you are not sure which role you fall into, it is worth reviewing your contract or asking the primary recipient for clarity. We \explore this distinction further in our article, Are You a Subrecipient or a Contractor? What Broadband Providers Need to Know, clarifying what it means for your compliance and audit obligations.

4. Is your grant covered by Uniform Guidance?
   Most federally funded broadband programs, like those administered by the National Telecommunications and Information Administration (NTIA), including the Broadband Equity, Access, and Deployment (BEAD) Program and the Rural Digital Opportunity Fund (RDOF), do fall under Uniform Guidance. Still, not all public grants or specific arrangements do.

Check your award agreement and any compliance supplement language. Look for references to:

• 2 CFR Part 200 or federal cost principles
• Office of Management and Budget (OMB) Compliance Supplement
• Single Audit or subrecipient monitoring

If these appear, you are likely in Uniform Guidance territory.

5. If you cross the threshold, who will perform the audit, and when?
   If a grant audit is required, it must be conducted by an independent CPA with experience in Generally Accepted Government Auditing Standards (GAGAS) or federal grant compliance. These audits involve deeper testing and reporting than a standard financial audit.

Results may need to be submitted to a federal agency or clearinghouse, often under strict timelines. Planning ahead reduces risk and keeps your team in control.

What if you are not there yet?

Even if your spending has not yet reached the threshold, now is the right time to prepare:

• Track federal spending separately by grant and funding source.
• Clarify your role (contractor vs. subrecipient) in each agreement.
• Maintain documentation for reimbursed costs.
• Talk to your CPA or advisor to understand your future obligations.

Early preparation builds control, reduces surprises, and ensures you are ready if thresholds are crossed.

Bottom line

Not every broadband provider needs a grant audit but figuring that out can be complex. At Keiter, we help clients assess whether federal or state funding triggers an audit and ensure their tracking, documentation, and internal controls are positioned for future compliance. Starting the conversation early helps you avoid unnecessary costs, reduce surprises, and maintain control as your funding ramps up.

Unsure whether your grant funding triggers an audit or how your role affects compliance requirements? Clarifying these questions early can help reduce risk and avoid unnecessary costs. Contact your Keiter Opportunity Advisor | Email | Call 804.747.0000 for more information.

Looking forward:

In the next article, we will help you clarify your role in grant-funded projects and determine whether you area subrecipient or a contractor. Understanding this distinction is critical for knowing your compliance obligations, reporting responsibilities, and whether a grant audit could apply to your company.

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).
• 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.