What type of report is needed annually if expenditures exceed $750,000 in federal funds?

When expenditures exceed $750,000 in federal funds, an Audit Report is mandated. This requirement is part of the Single Audit Act, which is designed to ensure that entities receiving federal funds are held accountable for their financial reporting and compliance with federal regulations. The Audit Report assesses whether the financial statements are presented fairly and in accordance with generally accepted accounting principles (GAAP) and reviews compliance with laws and regulations related to the federal funds received.

The importance of an Audit Report lies in its comprehensive nature—it not only evaluates the financial aspects but also examines the internal controls and compliance with federal requirements. This makes it a crucial document for the oversight of federal spending.

Other types of reports mentioned, while relevant in different contexts, do not fulfill this federal requirement. Financial Statements provide an overview of an organization's financial status but lack the compliance and regulatory assessments required by the federal government. Performance Reports focus on the outcomes of programs and the effectiveness of fund usage but again do not address the compliance needs tied to federal funding audits. Compliance Reports are also specific to certain regulations and do not replace the need for a full Audit Report when federal funding thresholds are met.