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|
|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)|
|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.
|District of Columbia|
|Georgia||If collections > USD 1 Million, audit is required.
If collections > USD 0.5 M but < USD 1 M, review is required.
|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
|Kansas||If contributions > $500,000, financial statement to be audited and accompanied by an opinion of an independent CPA .|
|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.
|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.
|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.
|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
|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.|
- 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.