Part of the Multi-State Fundraising Compliance Series. It is design to provide practical guidance on charitable solicitation registration and multi-state fundraising compliance.
Video Overview:
Many nonprofit leaders assume audit requirements are driven only by federal rules or internal policies. In reality, many states impose audit requirements based on revenue thresholds tied to charitable solicitation registration. This means an organization may be required to submit audited financial statements as part of its state filings—even if it has never needed an audit before.
In this video, we explain what audit thresholds are, how they vary by state, and how they apply to multi-state registration. We also walk through how revenue growth, grants, and expansion into new states can unexpectedly trigger audit requirements.
By understanding audit thresholds and planning ahead, nonprofits can avoid delays, reduce compliance risk, and ensure they are prepared as their financial reporting obligations evolve.
This video explains audit thresholds and when nonprofits are required to submit audited financial statements for registration.
This video is part of the Multi-State Fundraising Compliance Series, which explains charitable solicitation registration and nonprofit fundraising compliance requirements across the United States.
Key Topics Covered
- What audit thresholds are and how they work
- How states determine audit requirements
- Typical audit threshold ranges by state
- Difference between audit and CPA review requirements
- What revenue counts toward thresholds
Who This Video Is For
- Executive directors launching fundraising expansion
- Development teams building online campaigns
- Finance and compliance staff overseeing registrations
- Boards evaluating regulatory risk
- Organizations expanding fundraising beyond their home state
Video Summary
Audit thresholds are a key component of charitable solicitation registration, yet they are often misunderstood by nonprofit leaders. Rather than being driven solely by federal requirements, audit obligations are frequently determined by individual states based on revenue or contribution thresholds.
An audit threshold is the level of revenue at which a nonprofit must submit independently audited financial statements as part of its registration or renewal filings. These thresholds vary widely by state. Some states require audits at relatively lower revenue levels, while others set higher thresholds or allow CPA-reviewed financial statements below certain levels.
States require audits to promote transparency and accountability. As nonprofits grow and handle larger amounts of funding, regulators seek independent verification of financial reporting. Audited financial statements provide assurance that financial information is accurate and prepared in accordance with accepted accounting standards.
A critical point of confusion is what counts toward audit thresholds. In many states, thresholds are based on total gross revenue—not just donations. This means revenue from grants, program services, and other sources may be included in the calculation. As a result, organizations can trigger audit requirements even if their fundraising activity has not significantly changed.
Multi-state registration adds another layer of complexity. Each state may have different thresholds, definitions of revenue, and requirements for audits versus CPA reviews. A nonprofit may exceed the audit threshold in one state but not another. However, once an audit is completed, it is often used across multiple jurisdictions that require audited financials.
Many nonprofits are caught off guard by audit thresholds during periods of growth. A large grant, expanded programming, or entry into a new state with lower thresholds can trigger audit requirements unexpectedly. This can lead to delays in renewal filings, increased administrative workload, and unplanned accounting costs.
Planning ahead is essential. Monitoring revenue levels, understanding state-specific thresholds, and aligning audit preparation with renewal deadlines can help nonprofits avoid compliance issues. By treating audit thresholds as part of a broader compliance strategy, organizations can scale their operations while maintaining transparency and regulatory alignment.
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About the Multi-State Fundraising Compliance Series
The Multi-State Fundraising Compliance Series is an educational video series explaining charitable solicitation registration, multi-state fundraising compliance, and related nonprofit regulatory requirements. Each video addresses a specific compliance question commonly faced by nonprofit executives, development teams, and finance leaders.
Full Video Transcript
FAQs: Audit Thresholds Explained
What is an audit threshold for nonprofits?
An audit threshold is a revenue level set by a state that determines when a nonprofit must submit audited financial statements as part of its registration or renewal.
Do all states have the same audit threshold?
No. Each state sets its own threshold and may have different requirements for audits or CPA reviews.
What revenue counts toward audit thresholds?
In many states, total gross revenue is used—not just fundraising revenue. This can include grants, program income, and other sources.
When are audited financial statements required?
Audits are typically required when a nonprofit exceeds a state’s revenue threshold, though exact requirements vary by jurisdiction.
Are audit thresholds a penalty?
No. They are regulatory mechanisms designed to increase financial transparency as organizations grow.
Related Compliance Videos
- What Is Charitable Solicitation Registration?
- Which States Require Charitable Solicitation Registration?
- Charitable Solicitation Registration Explained for Nonprofits
- Do Small Nonprofits Need to Register in Every State?
Related Compliance Resources
- Where Nonprofits Must Register
- Charitable Solicitation Registration Audit Thresholds
- Multi-State Charitable Solicitation Registration Guide
Need Help Evaluating Your Registration Requirements?
If your organization is evaluating fundraising expansion or navigating multi-state registration requirements, you may schedule a consultation to discuss your situation.