USAID grant compliance: what changed when the threshold dropped.
The lowered USAID single-audit threshold pulls more Tanzanian sub-recipients into the documented population. Here is what changed, what auditors are now testing first, and the documentation packet that makes the audit easy.
The change announced for the 2026 financial year tightens single-audit eligibility and lowers the threshold for federally-funded sub-recipients. For Tanzanian NGOs working with USAID, the practical effect is that more programmes fall into the documented population, and the documentation-completeness check is now the first thing the auditor opens.
The three changes that matter
First, the documentation threshold dropped, more sub-recipients have to maintain a complete file. Second, eligibility testing now expects a documented eligibility decision per cost element, not just per disbursement. Third, the OMB single-audit reporting cycle has compressed, leaving less buffer between fieldwork and donor submission.
"The auditor used to ask for the file. Now they expect it to already be on the table."
Where pass-through grants fall short
Pass-through arrangements (the prime recipient passes funds to a sub-recipient) are where we see the most controllable gaps. The pass-through agreement often references USAID requirements but does not flow them down to the sub-recipient operations team. Result: the prime is held responsible for what the sub did, often without the documentation to defend it.
- Approved budget per programme cost category, signed.
- Eligibility-decision memo per cost element above materiality.
- Procurement files showing competition and pricing reasonableness.
- Time-and-effort records for grant-funded staff time.
- Sub-recipient monitoring file: pre-award diligence, periodic reports, follow-up evidence.
What we’re recommending
For NGOs with FY-end approaching: a documentation health-check before the audit lands. Half a day of partner-led work, with the same Claritas team that has stood up to USAID single-audit findings.