Charitable Registration Audit Requirements

Nationwide guide to financial statement requirements for nonprofits registering to solicit

When submitting annual charitable registration filings, nonprofits must include both their most recent Form 990 and financial statements. In 22 states, an independent CPA must review or audit the statements once the organization reaches the statutory income threshold. Two states, North Carolina and Virginia, do not require audited financial statements, but they will accept audits in lieu of Form 990.

Financial statements are necessary for an organization’s ongoing ability to solicit. Additionally, by having the proper statements prepared, organizations (and their leadership) demonstrate their duty of care and help foster a sector of transparency and trust.

Nonprofits should be prepared to meet the requirements of every state where they register to solicit. CPAs play a valuable role in advising organizations and preparing the annual financial statements needed to comply across jurisdictions. Labyrinth, Inc. works closely with nonprofits and their CPAs to ensure registrations are seamlessly filed and approved.

You can view our helpful table of state-specific charitable audit and financial statement requirements. Because these requirements vary greatly and often change, we encourage nonprofits, CPAs, and auditors to bookmark this page.

Key Terms and Definitions

Before we dive in, organizations should become familiar with a few key concepts.

Annual Contributions
This is the organization’s income resulting from individuals, foundations, and corporate contributors. Many states exclude government grants from their financial statement thresholds. Contributions are reported on:

Total Revenue
This is the organization’s income from all sources. Total revenue is reported on:

Audited Financial Statements
A report by an independent auditor, attesting to the fairness of presentation of the financial statements and related disclosures. In most states, audited financial statements must be prepared in accordance with Generally Accepted Accounting Principles (GAAP).
Reviewed Financial Statements
A more limited report made by an independent auditor. The report verifies that there are no material modifications needed for an entity’s financial statements to be in conformity with the application reporting framework. In most states, reviewed financial statements must be prepared in accordance with GAAP.
Compiled Financial Statements
An organization’s financial statements prepared by an accountant or CPA, but which do not have the assurances provided within reviewed or audited financial statements.
Internal Financial Statements
Financial reports from the organization’s own internal financial software or records. These usually consist of a Statement of Financial Position (Balance Sheet) and a Statement of Activities (Income Statement or Profit & Loss).

What Type of Financial Statements Are Required When Registering to Solicit?

Organizations that register in one or more states should expect to submit financial statements that meet the requirements of each. Regardless of the type (audited, reviewed, compiled, or internal), financial statements must be prepared for the same tax year as reported on Form 990.

Most states base their thresholds on either the Annual Contributions or the Total Revenue reported on the organization’s annual IRS Form 990 return. Florida and Illinois also generally consider program service revenue in addition to contributions.

State financial statement thresholds are not based on either of the following:

  • Contributions or income from an individual state.
  • The number of transactions in a particular year.

For example, a new organization receiving a significant contribution from a single donor may still be required to submit audited or reviewed financial statements if the total exceeds the state threshold.

An organization may need a different type of financial statement each year, depending on its annual income and the states where it intends to register. For example, in one year, the group may be able to submit internal financial statements. Following a significant uptick in contributions or overall growth, it may need to submit reviewed or even audited financial statements.

In all cases, proactive planning helps the organization budget for the cost of assurance work and avoids delays in state registrations.

Waivers From State Financial Statement Requirements

Nonprofits frequently inquire whether a state will waive its requirement for audited or reviewed financial statements. This commonly occurs with organizations seeking to register for the first time, but it may also happen as the organization’s annual income passes the threshold required for renewal.

Because financial statement requirements are set by statute, waiver requests are highly conditional, if not outright impermissible.

Registering organizations should not count on a waiver across states and certainly not for multiple years. While an individual state may waive a requirement for extenuating reasons, some states, like New Jersey, do not issue a waiver under any circumstances. And notably, no state will waive the requirement due to the cost of a CPA or auditor engagement.

Instead, organizations should be aware of and, with their CPA, annually plan to meet statutory financial statement requirements before submitting registration materials.

Table: Charitable Registration Audit and Financial Statement Requirements by State

Below is a table of the current financial statement requirements and thresholds for each state.

Disclaimer: These requirements pertain specifically to the act of filing charitable solicitation registration materials. Nonprofits may be required to obtain audited financial statements for other operating purposes and funding conditions. Organizations are encouraged to speak with a CPA or auditor for guidance on their specific requirements.

Alabama
NOT REQUIRED
Alaska
Audit Threshold
–
Review Threshold
–
Notes
Audited financials are not required when registering, but they may be requested by the state at a later time.
Arizona
NOT REQUIRED
Arkansas
Audit Threshold
$500,000 Total Revenue
Review Threshold
–
Notes
California
Audit Threshold
$2,000,000 Total Revenue
Review Threshold
–
Notes
  • Required for RRF-1 renewal filings only.
  • Government grants do not count as gross revenue in this instance. California also requires charities with greater than $2 million in revenue to establish an audit committee.
Colorado
NOT REQUIRED
Connecticut
Audit Threshold
$1,000,000 Total Revenue
Review Threshold
$500,000 Total Revenue
Notes
Delaware
NOT REQUIRED
District of Columbia
NOT REQUIRED
Florida
Audit Threshold
$1,000,000 Annual Contributions
Review Threshold
$500,000 Annual Contributions
Notes
  • Organizations may elect to submit their IRS form 990 instead of an audited or reviewed financial statement.
  • Organizations that do not file a long Form 990 may be required to submit financial information on the Department’s form.
Georgia
Audit Threshold
$1,000,000 Annual Contributions
Review Threshold
$500,000 Annual Contributions
Notes
Hawaii
Audit Threshold
$500,000 Total Revenue
Review Threshold
–
Notes
Also required to submit if the charity is required pursuant to a government authority or third party
Idaho 
NOT REQUIRED
Illinois
Audit Threshold
$300,000 Annual Contributions
Review Threshold
–
Notes
  • If the organization uses a professional fundraiser to solicit in Illinois, the audit threshold is lowered to $25,000 in annual contributions.
  • Contributions include gross amounts of cash plus gross sums paid by the public for merchandise, special events, and services.
Indiana
NOT REQUIRED
Iowa
NOT REQUIRED
Kansas
Audit Threshold
$500,000 Annual Contributions
Review Threshold
–
Notes
Kentucky
NOT REQUIRED
Louisiana
NOT REQUIRED
Maine
NOT REQUIRED
Maryland
Audit Threshold
$750,000 Annual Contributions
Review Threshold
$300,000 Annual Contributions
Notes
$100,000 annual contribution threshold for private foundations associated with any Maryland state agency
Massachusetts
Audit Threshold
$500,000 Total Revenue
Review Threshold
$200,000 Total Revenue
Notes
All financial statements must be complete and in final form (drafts are not acceptable), unbound, and with an opinion letter signed by the CPA. The Division does not accept compilations.
The following organizations are exempt from the audit/review requirement:
  • Private foundations that file 990PF with the IRS
  • Trusts filing probate accounts with the Division
  • Certain trusts audited by state and federal agencies
Michigan
Audit Threshold
$550,000 Annual Contributions
Review Threshold
$300,000 Annual Contributions
Notes
Minnesota
Audit Threshold
$750,000 Total Revenue
Review Threshold
–
Notes
Financial statements are required for renewal only.
Mississippi
Audit Threshold
$750,000 Annual Contributions
Review Threshold
$250,000 Annual Contributions
Notes
Organizations that use a professional solicitor, fundraising counsel, or other paid fundraising professional must also file audited financials, regardless of their annual contributions.
Missouri
NOT REQUIRED
Montana
NOT REQUIRED
Nebraska
NOT REQUIRED
Nevada
NOT REQUIRED
New Hampshire
Audit Threshold
$2,000,000 Total Revenue
Review Threshold
–
Notes
Organizations with total revenues of $500,000 to $1,999,999 must submit a GAAP financial statement prepared by the organization in-house or prepared by an accountant and reviewed and approved by the organization.
New Jersey
Audit Threshold
$1,000,000 in monetary donations
Review Threshold
–
Notes
Non-monetary donations in the form of in-kind contributions directly related to any stated purpose or mission of the charitable organization, including food for food pantries or food banks, supplies for shelters, and such other forms of in-kind contributions as may be permitted by the Attorney General, shall not constitute gross revenue with respect to the requirement of an annual financial report with a financial statement audited by an independent certified public accountant.
New Mexico
Audit Threshold
$750,000 Total Expenses
Review Threshold
–
Notes
New York
Audit Threshold
$1,000,000 Total Revenue
Review Threshold
$250,000 Total Revenue
Notes
Required for CHAR500 renewal filings only. If the organization is registered under 7A and raised less than $25,000 in NYS during a particular tax year, it may not be required to file financial statements of any kind.
North Carolina
Audit Threshold
–
Review Threshold
–
Notes
Organizations have the option to submit either Form 990, audited financial statements, or the North Carolina Annual Financial Report Form
North Dakota
NOT REQUIRED
Ohio
NOT REQUIRED
Oklahoma
NOT REQUIRED
Oregon
NOT REQUIRED
Pennsylvania
Audit Threshold
$750,000 Annual Contributions
Review Threshold
$250,000 Annual Contributions
Notes
  • Compiled financials are required for charities with at least $100,000 in Gross Annual Contributions.
  • Organizations under $100,000 may be required to file internal financial statements.
Rhode Island
Audit Threshold
$500,000 Total Revenue
Review Threshold
–
Notes
South Carolina
NOT REQUIRED
South Dakota
NOT REQUIRED
Tennessee
Audit Threshold
$500,000 Total Revenue
Review Threshold
–
Notes
Texas
Audit Threshold
–
Review Threshold
–
Notes
  • Most charitable organizations, with the exception of some veterans and public safety organizations, are exempt from the requirement to register with the State.
  • Organizations are asked to submit financial statements only if they have not filed an IRS Form 990. In such cases, audited financials must be included if any have been prepared.
Utah
NOT REQUIRED
Vermont
NOT REQUIRED
Virginia
Audit Threshold
–
Review Threshold
–
Notes
  • Organizations have the option to submit either Form 990 or audited financial statements with their annual Form 102 registration materials.
  • If the organization files Form 990-N, it must submit a Certified Treasurer’s Report (signed internal statements) from the previous tax year.
Washington
Audit Threshold
–
Review Threshold
–
Notes
  • Washington does not require submission of audited financials with registration or renewal, but audited financials must be made available in paper form to the public upon request or accessible to the public on the internet.
  • Organizations with between $1M and $3M in total revenue averaged over the previous 3 years must make either their IRS Form 990 or audited financials available in paper form to the public upon request or accessible to the public on the internet.
West Virginia
Audit Threshold
$500,000 Total Revenue
Review Threshold
$200,000 Total Revenue
Notes
Wisconsin
Audit Threshold
$1,000,000 Annual Contributions
Review Threshold
$500,000 Annual Contributions
Notes

  • Organizations that met the review threshold during the last fiscal year but had more than $200,000 contributions come from a single contributor and raised less than $300,000 during the three years preceding the most recent fiscal year may be eligible for a waiver.

  • Organizations that met the audit threshold during the last fiscal year but had more than $700,000 contributions come from a single contributor and raised less than $300,000 during the three years preceding the most recent fiscal year may be eligible for a waiver.
Wyoming
NOT REQUIRED