Charitable Registration Audit Requirements

Definition - Audited Financial Statements

A report by an independent auditor, attesting to the fairness of presentation of the financial statements and related disclosures.

Definition - Reviewed Financial Statements

A more limited report that verifies that there are no material modifications that need to be made to an entity’s financial statements for them to be in conformity with the application reporting framework.

Twenty-four jurisdictions require audited financial statements to be included with charitable registration applications. However, only organizations that exceed the jurisdiction’s revenue or contributions threshold need to provide the audit. Still, other jurisdictions provide more flexible requirements, for instance:

• Alaska requires audits only upon request
• Florida, North Carolina, and Virginia all allow the IRS Form 990 to take the place of the audit
• Illinois and Maryland have set audit thresholds, but they can be changed if the applicant meets certain criteria. Illinois lowers the audit threshold for organizations using professional fundraisers.
• Maryland also lowers the audit threshold for private foundations associated with any Maryland jurisdiction agency.

Along with the audit requirements, nine jurisdictions may also request reviewed financial statements, usually at a lower threshold than the audit. Reviewed financial statements are easier and less costly than audits to obtain, but they are no less important in terms of getting a registration approved.