Category Archives: Audit

Audit Requirements for Nonprofits

What do we mean when we talk about an audit?  There are several kinds of audit, each for a different purpose, but the one most likely to be needed by a charity or nonprofit is an independent financial audit.  It is an examination of an organization’s records to determine the accuracy of its financial statements covering a specific time period, and it is conducted by a Certified Public Accountant (CPA) at the organization’s expense.  The IRS does not require this type of audit, but an independent audit may be required by large donors, by state agencies, by lenders, or by the organization’s own Board of Directors—in other words, anyone who has a need to determine the organization’s financial health.

Many states where a charity must register to solicit donations require an independent audit to be performed each year that the organization’s revenue or contributions reach a certain level.  State audit requirements vary, from Pennsylvania’s threshold of $300,000 in revenue to California’s threshold of $2 million.  Organizations with less annual revenue may be required to have an independent review of their financial statements, conducted by a CPA.  A review is similar to an audit but requires less work by the auditor and is less expensive for the organization.

An independent audit must comply with what are known as Generally Accepted Accounting Principles (GAAP), but there can be additional requirements.  For example, an organization which receives federal funds and expends $750,000 or more of those funds in one year must comply with the Single Audit Act of 1984.   Guidelines for this type of audit are issued by the federal Office of Management and Budget.  This requirement applies whether the organization receives the funds from one or from multiple sources, including government contracts, grants, loans, subsidies, and donated property.  Also, federal funding does not only mean the funding that comes directly from the federal government; instead, money that reaches an organization by a pass-through entity, such as a state government or local agency, is also included in this definition.

A ‘Single Audit’ as defined in the law is very similar to an independent audit, but its scope is usually widened to all financial activities and operations of the organization.   It also includes more detailed and in-depth testing of expenses, in order to ensure that all financial data is presented fairly and accurately and that adequate internal controls and checks are in place.  At the same time, this audit also reviews compliance with any federal or state regulations related to the specific program or funding source.   The report of the Single Audit must be made available to the public.

The auditor performing the Single Audit must have a higher level of certification and the increased testing means an increased cost to the organization.  However, the cost is an allowable indirect cost of administering the federal funds.

June Newsletter – Nonprofit Renewal Deadlines, Audits, & Upcoming Webinar

Summer Salutations

June 30th State Charity Registration Deadlines

Did you know that not only do you need to file an extension with the IRS you need to also file for an extension of time to file with the Secretary of State or the Attorney General’s office for your Charity Registration Renewal or Annual Financial forms?

Eight states have due dates that are 6 months after the fiscal year end so for 67% of our customers they should be preparing to send their state renewals or preparing extensions for Kansas, Illinois, Maryland, Michigan, Minnesota, New Jersey, New Mexico and Tennessee.  

Alaska, North Dakota, and Wisconsin are not far behind with due dates beginning September 1st. If you are waiting for your financials to be ready, sign into your account today to print and send in your extension forms if not file your renewal packages today!!

Other states to be aware of are DC, FL, GA, NV, OK, RI, UT and WV which use the organization’s registration anniversary date as the renewal due date which is dependent on your previous registration.  Those dates can be found on your last registration approval letter from the state or the state’s website.

Audits

Did you know that 22 states have audit requirements??  Audit requirements begin at 200K for some state registrations and renewals while most average around 500K for an independent audit.  Total revenue is the trigger for most audits while contributions are the basis for other states and about half have some type of exclusion for government agency fees & grants as well as some “other types” of income.  Read the Blog

Webinar

If you would like to get to know us better or need a refresher join our webinar on July 6, 2017 at 2:00 EST.  Please register at  Simple Charity Registration – annual state charity registration made easy!

See how it works click here

If you have any comments, questions or concerns, please contact us at 800-780-6027 or support@simplecharityregistration.com for more detailed answers.

Is My Nonprofit Organization Required to Have an Audit?

Is your organization required to submit an audit with your state charity registration or renewal?? Simply stated, “Yes”!! Over half of the states that require state charity registration and annual financial reporting do require audited Financial Statements by a independent CPA in addition to the IRS 990 reporting.

Most states base their requirements on Total Revenue while the others base theirs on Total Contributions while some exclude government agency fees & grants, foundation grants, membership fees and investment income.

State Financial Statements Review Audit
Alabama No Audit Required
Alaska No Audit Required
Arizona Veteran’s Organizations Only – No Audit Requirement
Arkansas Revenue > $500K
California Revenue > $2M
Colorado No Audit Required
Connecticut Revenue > $500K *
Delaware
DC No Audit Required
Florida $500K to 1M Contributions > $1M
Georgia Revenue < $500K $500K to 1M Revenue > $1M *
Hawaii Revenue > $500K *
Idaho No Charity Registration Required
Illinois Contributions > $300K **
Indiana No Charity Registration Required
Iowa No Charity Registration Required
Kansas Contributions > $500K
Kentucky No Audit Required
Louisiana No Audit Required
Maine No Audit Required
Maryland $300K to $750K Contributions > $750K *
Massachusetts 200K to $500K Revenue > $500K
Michigan $275K to $525K Contributions > $525K *
Minnesota Revenue > $750K
Mississippi $250K to $500K Contributions > $500K *
Missouri No Audit Required
Montana No Charity Registration Required
Nebraska No Charity Registration Required
Nevada No Audit Required
New Hampshire Revenue > $500K to $1M Revenue > $1M
New Jersey Revenue > $500K
New Mexico Revenue > $500K
New York $250K to $500K Revenue > $500K
North Carolina No Audit Required
North Dakota No Audit Required
Ohio No Audit Required
Oklahoma No Audit Required
Oregon No Audit Required
Pennsylvania  $100K to $300K Contributions > $300K *
Rhode Island Revenue > $500K
South Carolina No Audit Required
South Dakota No Charity Registration Required
Tennessee Revenue > $500K *
Texas Veteran’s and Police Organizations Only – No Audit Requirement
Utah No Audit Required
Vermont No Charity Registration Required
Virginia No Audit Required
Washington No Audit Required
West Virginia $100K to $200K Contributions > $ 200K *
Wisconsin $300K to $500K Contributions > $500K *
Wyoming No Charity Registration Required
* These states excluding certain types of revenue such as government agency fees & grants,
foundation grants, membership fees and investment income.
** $25K if professional fundraiser usedAs of 4/30/17

Please contact us with any comments, questions or concerns at (800) 780-6027 or support@SimpleCharityRegstration.com.