Audit Requirements for Nonprofits

The federal Government prescribes that nonprofit organizations spending $500,000 or more in federal contract dollars in any given fiscal year must obtain ‘single audit’ report to ensure that it complies with federal grants management procedures. (For more details on this, refer – white house nonprofit audit circular )

The federal laws do not prescribe any other across-the-board guidelines for audit of nonprofit organizations but many a states have set up rules governing the audit of nonprofits. Whether or not a nonprofit organization needs to get its book of accounts audited depends upon the applicable state statute on solicitation of funds for charitable purposes.

Some states statues remain silent on the issue while others have generally prescribed the limit on gross revenue or contributions received beyond which a nonprofit organization would require to get its books audited or only ‘reviewed’ by a CPA or CPA firm.

The state wise requirements are mentioned below.

U.S.A State Audit requirement
Alabama
Alaska
Arizona
Arkansas If gross revenue > USD500,000, audit report from a CPA is required.

Government grants and fees are excluded from gross revenue calculated for this purpose.

California If gross revenue > = $2,000,000, audit by an independent CPA is required. (not applicable for educational institutes/ hospitals)
Colorado
Connecticut If gross revenue > $200,000, audit report from a CPA is required.

Government grants, fees & income from supporting organizations are not included when calculating gross revenue for this purpose.

Delaware
District of Columbia
Florida
Georgia If collections > USD 1 Million, audit is required.

If collections > USD 0.5 M but < USD 1 M, review is required.

Hawaii
Idaho
Illinois An  independent CPA opinion on financial statement required

1) If revenue > $150,000 or

2) if professional solicitor is involved and revenue > $25,000

Indiana
Iowa
Kansas If contributions > $500,000, financial statement to be audited and accompanied by an opinion of an independent CPA .
Kentucky
Louisiana
Maine If annual contributions> $30,000, the financial report should be made by an accountant authorized by the Maine Board of Accountancy or any equivalent board in another state.
Maryland If contributions >= $200,000, audit by an independent CPA required.

if contributions are >= $100,000 & < $200,000, review by an independent CPA is required.

Massachusetts If gross revenue >= $500,000,  audit by an independent CPA required.

if gross revenue > = $100,000 but < $500,000, review by an independent CPA required. Not applicable for religious organizations. ._

Michigan If contributions > = $250,000 audit and certification by a CPA.

If contributions are in the range of $100,000 – $250,000, audit or review required.

Minnesota if gross revenue  > $350,000 – audit of financial statement and opinion of  a CPA required.
Mississippi if contributions > = $100,000 Financial statement should be annexed with the opinion of a CPA.

if services of professional fundraiser are used and if contributions are $25,000 – $100,000  opinion of CPA must be annexed.

Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey If gross revenue > $100,000 – audit required by an independent CPA.

If gross revenue > $25,000 and <$100,000 – AG MAY require audit.

New Mexico if gross revenue > $500,000 , audit by an independent CPA is required
New York If gross revenue > $250,000 – audit + opinion  on financials required.

If gross revenue > $100,000 but < $250,000 review by CPA is required.

North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania If contributions > $125,000 , audit by PA or an independent CPA required.

If contributions > $50,000 but < $125,000 review required by PA or CPA.

Rhode Island If gross revenue > = $500,000 audit required by an independent CPA.

if gross < $500,000 but there is a cause to believe a possible violation of state solicitation statute, the Director of Dept. of Business Regulation MAY still ask for an audit.

South Carolina
South Dakota
Tennessee If gross revenue > $300,000, audit required.

if $30,000> gross revenue < $250,000,  Sec. of State may still require audit in specific cases.

*Gross revenue does not include government grants and grants from private

Foundations.

Texas
Utah
Vermont
Virginia
Washington
West Virginia if contributions > $100,000, audit by independent PA is required. Contributions do not include government grants or grants from private foundations.
Wisconsin If contributions > $100,000 audit and opinion of an independent CPA required.
Wyoming

  • The figures reported here are subject to change. For latest rulings please refer to your state’s office of director of Dept. of Business Regulation or the Attorney General office or the secretary of state office.
  • States for which no rulings have been mentioned did not furnish any such guidelines at the time of collation. For latest rulings please refer to your state’s office of director of Dept. of Business Regulation or the Attorney General office or the secretary of state office.
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About the Author:


Samuel D. Payne is an accountant by profession specializing in nonprofit audit, tax and services.You can contact him for reliable and expert guidance on non-profit accounting and quality auditing services. His areas of speciality include: OMB circular A-133 audits, Exempt Organization tax returns, Internal Controls, Budgeting, Accounting & Bookkeeping , Payroll Processing and Grants Management.

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