When it comes to audits, an independent nonprofit audit is different than an IRS audit. An independent auditor, who should be a Certified Public Accountant (CPA), completes an independent audit. These audits are an examination of your financial statements and accounting records. Once a nonprofit audit is completed, the auditor will give your company a report that will sum up whether your nonprofit’s accounting records and statements represent your company’s true financial position.
When You May Need a Nonprofit Audit
While the IRS does not require audits of nonprofit organizations, other government agencies do. Around one-third of all states ask that nonprofits that meet a particular annual revenue size be audited if they use funds from state revenue. There are other circumstances that may require your nonprofit to have an independent audit completed. These may include:
- Charitable nonprofits that expend federal funds to the sum of $750,000 or more in one year.
- Nonprofits who have contracts with state or local governments that allow you to provide services within your state or county.
- Your state laws require all charitable nonprofits to submit an audited financial statement.
- When submitting a grant proposal a private foundation may ask you to provide your most recent audited financial statement.
- If submitting a loan application, a bank may require an audit.
When your nonprofit is asked to provide a nonprofit audit statement, it is good if you have already had a recent audit completed. This way you can provide the information efficiently. If you feel your company is too small and an independent audit may be out of your budget, you can ask the requestor if providing alternate financial information would meet the criteria.
If you are unsure of whether you may need an independent nonprofit audit, or you are looking for a Certified Public Accountant, contact the team at Ernst Wintter & Associates today. We can help you with all of your nonprofit’s accounting needs.