Nonprofit Audits

FAQ: When do I need an audit of my organization’s financial statements?

Answer: Non-profit organizations are required to obtain audits for various reasons:

• Banking requirements (loan covenants)
• State requirements are met:
  • Florida Statute Requirements 496.407(1)(b)
    • For a charitable organization or sponsor that receives less than $500,000 in annual contributions, a compilation, audit, or review of the financial statement is optional.
    • For a charitable organization or sponsor that receives at least $500,000 but less than $1 million in annual contributions, the financial statement shall be reviewed or audited by an independent certified public accountant.
    • For a charitable organization or sponsor that receives $1 million or more in annual contributions, the financial statement shall be audited by an independent certified public accountant.
  • Organizations in the State of Florida that expend greater than $750,000 in state funding are required to complete a state single audit.
  • Please also see other state audit requirements through this website: https://www.councilofnonprofits.org/nonprofit-audit-guide/state-law-audit-requirements
• Organizations expend greater than $750,000 in federal funding are required to obtain a Single Audit in accordance with the Uniform Grant Guidance.
• Preparation for merger with another organization
  • If your organization is likely to merge with another, it will be recommended that you obtain multiple years’ worth of audited financial statements in order to give the acquiring organization assurance that your non-profit financial statements have gone under examination by an independent third party accountant.
• Financial statement checkup to obtain an independent analysis of the strengths and weakness of your organization.

FAQ: What is the purpose of an independent financial statement audit?

Answer: To provide financial statement users with reasonable, but not absolute, assurance that the financial statements prepared by management are fairly presented in conformity with accounting principles generally accepted in the United States of America.

FAQ: How long does it take to complete an audit?

Answer: The audit timeframe will vary depending on the size of the entity, its internal accounting & bookkeeping functions, and the complexity and nature of the specific transactions it engages in.

FAQ: What is the difference between a private company’s audit and a non-profit’s?

Answer: While many parts of the report, financial statements, footnotes and audit procedures will appear and be similar, there are several differences between the two. These differences arise out of the needs of the readers of the financial statements and as such the AICPA has developed specifically guidelines for non-profit entities, for example:

• Under ASU 2016-14, Presentation of Financial Statements of Not-for-Profit Entities, (effective fiscal years beginning after December 15, 2017) an organization is required to report in the financial statements the nature and function of expenses incurred by the non-profit organization, typically represented by the Statement of Functional Expenses. Further, ASU 2016-14 requires disclosure of the organization’s liquidity and available resources.
  • This creates additional procedures for auditors to provide assurance around the presentation of these expenses and the liquidity of the organization.
• Presentation of Net Assets With Donor Restrictions and Net Assets Without Donor Restrictions is required. For non-profits that have received contributions that have a time or use restriction made by the donor, they must be reflected as Net Assets With Donor Restrictions.
  • Auditors will need to test contributions made during the year for the appropriate presentation of these contributions and their subsequent release from restriction.
• Many non-profits have endowment funds that are restricted or designated to be used in a specific way in the future.
  • Auditors will have to test the use of any withdrawals of these funds, contributions to or investment earnings on the endowment.

FAQ: Will the audit be completed to meet reporting requirements and deadlines?

Answer: Assurance Dimensions works hand in hand with the client to ensure that the audits are completed and any deadlines and/or reporting requirements are met. Our continued commitment to provide quality audits is derived from the client relationships that we have built. Our experienced professionals work with clients to obtain the necessary audit support in a timely manner to ensure the audit is completed in accordance with required AICPA standards while simultaneously meeting the reporting requirements.