According to California law, a charitable nonprofit corporation with a gross annual revenue of 2 million dollars or more and that is currently required to file a report with the General Attorney must have their financial statements audited by an independent CPA.

What happens when a non profit gets audited?

During a nonprofit audit, expect members of your team (especially management) and your board of directors to be interviewed. Once the audit is finished, the report will state that it was performed within the required standards and qualifications and express an “opinion,” which will be your nonprofit audit result.

Why do nonprofits get audited?

Prove Your Finances. First of all, audits are useful to show that the organization’s financial statements are accurate and to give an unbiased view of the organizations financial status. The auditor will do an independent investigation to test the accuracy of accounting records and internal controls.

When does a nonprofit organization need an audit?

Circumstances that may trigger the requirement for an independent audit include: Federal, state, and local governments may request a copy of the organization’s audited financial statements. Charitable nonprofits that expend $750,000 or more in federal funds in a year are subject to special audit requirements.

Do you have to be audited by the IRS?

The IRS does not require nonprofits to obtain audits, but federal and state government agencies do depending on your nonprofit’s size or spending. An independent audit is not the same as an IRS audit. Independent audits are mandatory for some nonprofits.

Do you have to have an independent audit?

Not all charitable nonprofits are required to conduct an independent audit. Circumstances that may trigger the requirement for an independent audit include: Federal, state, and local governments may request a copy of the organization’s audited financial statements.

Do you need an audit to get a grant?

Private foundations may request that a nonprofit submit a copy of the nonprofit’s most recent audited financial statements in conjunction with submitting a grant proposal. Some banks may require a nonprofit to have an audit as a condition of receiving a loan.