Does your Nonprofit Need an Audit?
by Brittany Powell
The National Council of Nonprofits’ Audit Guide (“Audit Guide”) can provide your organization with a starting point for making the decision on whether or not your nonprofit organization needs an audit.
As the Audit Guide points out in its “Does your nonprofit need to have an independent audit?” section, nonprofits may be required to have an audit for various reasons including, but not limited to, compliance with specific grant agreements or loan covenants. Additionally, a nonprofit organization may be required to have a Yellow Book or Single Audit depending on its level of Federal or State expenditures. A nonprofit with federal expenditures equal to or exceeding $500,000 is required to have a Single Audit. As discussed in our February 10, 2014 blog post, this threshold will increase to $750,000 beginning with fiscal years beginning on or after December 26, 2014. This Audit Guide provides a summary for each state’s audit requirements. North Carolina requires “a non-governmental entity that receives $500,000 or more annually in state funds” to submit a Yellow Book audit.
However, an audit may not be necessary or cost effective for all nonprofit organizations. A review, while substantially less in scope than an audit, provides limited assurance over an entity’s financial statements. Therefore, a review can be a viable, less costly alternative to an audit for some nonprofit organizations.
If you are considering an audit or review for your nonprofit, contact someone at our office to help you determine the engagement type that best fits your organization’s needs. See the Audit Services & Consulting section of our website for more information about audits, reviews, and other services we provide.
Brittany Powell is a Senior Accountant with Langdon & Company LLP. She specializes in audit, serving a wide variety of nonprofit organizations.