For many not-for-profit organizations around the country, the answer to this question might depend on the size of the organization and the amount of funding it takes in annually. The most direct answer for all not-for-profit companies in Florida and Vero Beach specifically is - yes, you should have an independent audit performed annually, or at least a review (less rigorous than an audit) or compilation (the financial statements are scanned for obvious errors).
In the case of very small NFP organizations which have limited resources, a full independent audit may not be necessary when negotiating with a government agency. If one is requested, it is sometimes possible to persuade the agency to accept a review or compilation as proof of compliance rather than the more expensive full-blown audit.
For many states, twenty-four in fact, there is no state requirement to conduct an annual audit, so there would only be the federal requirement to do one in cases where federal funds exceeding $500,000 are spent in a single calendar year. Florida happens to be one of the remaining twenty-six states that does require an annual audit, subject to the following conditions:
- organizations receiving annual contributions exceeding $1 million must have an independent audit performed
- organizations whose contributions fall between $500,000 and $1 million must have their financial statements reviewed or audited by an independent certified public accountant (CPA)
- organizations receiving less than $500,000 in contributions, an audit, a review or a compilation is optional
Other Situations Requiring an Audit
There are other reasons that a not-for-profit organization would need to conduct an independent audit aside from the federal or state requirements mentioned above. Any of the following scenarios could trigger the need for an audit:
- banks sometimes require an audit from a non-profit organization as a condition for a loan to make sure proper financial procedures are being used, and that financial statements are an accurate representation of the business
- private foundations may request audited financial statements as part of a grant proposal
- contracts with state and local governments to provide community services sometimes stipulate that an independent audit be conducted by the non-profit organization
In general, smaller non-profit organizations are not subject to the same kind of scrutiny from government agencies that large NFPs are, and this stands to reason because in larger organizations many more funds are involved, and there is a greater need for accuracy and compliance. Whether your Vero Beach not-for-profit organization is subject to an independent audit or not, it is still a good Idea to have one conducted periodically, especially since highly competent Vero Beach audit services are so readily available. It is always worth knowing exactly where your vulnerabilities are in terms of accounting and tax data, and it is very important that accounting procedures follow Generally Accepted Accounting Principles (GAAP), to be sure you are operating within accounting standards.
Vero Beach Audit Services
If your NFP has need of independent auditing, or is interested in compilation or review procedures, the firm to contact is Kmetz, Nuttall, Elwell, Graham, PLLC (KNEG), a team of certified public accountants well versed in all auditing procedures. KNEG is an experienced team dedicated to ensuring that clients understand their data and how it affects their business, and that it is properly represented in financial statements that follow GAAP standards.