Charity state registrations require supporting documents and in many states these include audited financial statements or other financial statements. Whether a nonprofit needs to provide an audit to a state regulator depends on a number of factors including the state the nonprofit is registering in, what their revenue and contributions are, whether they employ a professional fundraiser, etc. This article will provide an overview of charity audit requirements with regard to charitable solicitation registrations.
In some states, even though an audit is required, the state may issue a one-time audit waiver which allows a charity to register one annual filing without providing audited financial statements. This often requires a request for the audit waiver and an explanation of why it is necessary.
Below is a summary of the audit requirements in those states that require an audit for nonprofits above a certain revenue threshold. If you need additional guidance, please feel free to contact the compliance specialists at Completely Compliant. This is what we do and we can help you.
Arkansas: An audit is required if revenue is greater or equal to $500,000
California: An audit is required for renewal registrations if revenue is greater or equal to $2,000,000. California offers an audit waiver. California does not require an audit for initial registrations.
Connecticut: An audit is required if revenue is greater or equal to $500,000. Connecticut offers an audit waiver.
Florida: An audit is required if revenue is greater or equal to $1,000,000. If revenue is below $1,000,000, but is greater or equal to $500,000, Florida requires reviewed financial statements.
Georgia: An audit is required if contributions are greater or equal to $1,000,000. If contributions are below $1,000,000, but are greater or equal to $500,000, Georgia requires reviewed financial statements. Georgia offers a waiver for the audited financial statements and reviewed financial statements.
Hawaii: An audit is required for a renewal filing if contributions are greater or equal to $500,000. Hawaii does not require an audit for the initial filing.
Illinois: An audit is required for a renewal filing if revenue are greater or equal to $300,000 or if the organization hired a fundraiser who raised $25,000 or more on behalf of the nonprofit. Illinois calculates revenue differently than other states and it does not match up to the IRS Form 990 revenue so you will need to look at the Illinois registration form to see if an audit is necessary. Illinois does not require an audit for the initial filing. Illinois offers and audit waiver.
Kansas: An audit is required if revenue is greater or equal to $500,000.
Maryland: An audit is required for a renewal filing if revenue are greater or equal to $750,000. Maryland calculates revenue differently than other states and it does not match up to the IRS Form 990 revenue so you will need to look at the Maryland registration form to see if an audit is necessary. If this calculation is less than $750,000, but is greater or equal to $300,000, then Maryland requires reviewed financial statements. Maryland offers a waiver for both the audited financial statement and reviewed financial statement requirements.
Massachusetts: An audit is required for renewal registrations if revenue is greater or equal to $500,000 and the organization does not file an IRS Form 990-PF. For organizations that have revenue less than $500,000, but greater or equal to $200,000, and which do not file a 990-PF, Massachusetts requires reviewed financial statements. Massachusetts offers an audit waiver as well as a waiver for the reviewed financial statement requirement. Massachusetts does not require financial statement with the initial filing
Michigan: An audit is required for renewal registrations if contributions are greater or equal to $550,000. For organizations that have revenue less than $550,000, but greater or equal to $300,000, Michigan requires reviewed financial statements. Michigan defines contributions such that it includes government grants, but does not include some revenue from fundraising events. Michigan offers an audit waiver as well as a waiver for the reviewed financial statement requirement.
Minnesota: An audit is required for a renewal filing if revenue is greater or equal to $750,000. Minnesota does not require an audit with the initial registration in the state.
Mississippi: An audit is required if contributions are greater or equal to $500,000 or if the organization uses a professional solicitor or fundraising counsel. If contributions are below $500,000, but are greater or equal to $300,000, Mississippi requires reviewed financial statements.
Missouri: An audit is required if revenue is greater or equal to $500,000. Missouri offers an exemption from state registration requirements to 501(c)(3) organizations so most nonprofits can avoid registration and audit requirements in Missouri.
New Hampshire: An audit is required for organizations that were incorporated or founded in New Hampshire if their revenue is greater or equal to $1,000,000. New Hampshire organizations whose revenue is less than $1,000,000, but over 500,000 are required to provide reviewed financial statements. New Hampshire does not require an audit or review for organizations incorporated outside of New Hampshire.
New Jersey: An audit is required if revenue is greater or equal to $500,000 and contributions are greater than $25,000.
New Mexico: An audit is required if revenue is greater or equal to $500,000.
New York: An audit is required with renewal registration if revenue is greater or equal to $750,000. For organizations that are filing a renewal registration and have revenue less than $750,000, but greater or equal to $250,000, New York requires reviewed financial statements. New York does not require reviewed or audited financial statements with the initial registration filing in the state. New York offers a waiver for audit and review requirements.
Pennsylvania: An audit is required if revenue is greater or equal to $750,000. For organizations that have revenue less than $750,000, but greater or equal to $250,000, Pennsylvania requires reviewed financial statements. For organizations that have revenue less than $250,000, but greater or equal to $100,000, Pennsylvania requires compiled financial statements. For organizations that have revenue less than $100,000, Pennsylvania will accept internally prepared financial statements.
Rhode Island: An audit is required if revenue is greater or equal to $500,000. Rhode Island offers an Audit Waiver.
Tennessee: An audit is required if revenue is greater or equal to $500,000. Tennessee excludes government grants and foundation grants from its revenue calculation.
West Virginia: An audit is required if contributions excluding government grants are greater or equal to $500,000. For organizations that have contributions less than $500,000, but greater or equal to $200,000, West Virginia requires reviewed financial statements.
Wisconsin: An audit is required if contributions are greater or equal to $500,000. For organizations that have contributions less than $500,000, but greater or equal to $300,000, Wisconsin requires reviewed financial statements.