Understanding Financial Review and Audit Requirements for Non-Profits in Florida and Beyond

Non-Profits in Florida face unique financial review and audit requirements to ensure compliance and transparency. This article outlines these requirements, the implications of soliciting funds from outside the state, and the benefits of choosing an audit over a financial review.

Financial Review and Audit Requirements in Florida

Thresholds for Requiring Financial Reviews and Audits:

• Gross Revenue Less Than $500,000: No financial review or audit required, but an annual financial report must be presented to the FDACS.
• Gross Revenue Between $500,000 and $1,000,000: Financial statements must be reviewed by an independent CPA.
• Gross Revenue Over $1,000,000: Financial statements must be audited by an independent CPA.

Definitions:

• Financial Review: A CPA provides limited assurance that the financial statements are not materially misstated.
• Audit: A full-scope service that provides reasonable assurance that the financial statements are free from material misstatement.

Soliciting Funds Outside Florida

When nonprofits solicit donations across state lines, they must comply with the strictest regulations of the states where they solicit funds, often adhering to lower audit thresholds.

Implications for Florida Nonprofits:

• Increased Compliance: Adopting the strictest encountered thresholds simplifies financial reporting and ensures multi-state compliance.
• Additional Costs: Audits are more expensive than financial reviews, requiring careful budget management.

When to Opt for an Audit Over a Financial Review

Enhanced Credibility and Confidence: An audit provides higher assurance, enhancing credibility with donors and stakeholders.

Opportunity for Grants and Funding: Many funders require audited financial statements.

Detailed Financial Insights: Audits can reveal insights into financial practices, aiding management and efficiency.

Benefits in Regulation and Compliance: Ensures adherence to best practices, reducing the risk of fines and penalties.

Uniform Compliance: Simplifies compliance across multiple states, avoiding legal complications.

Fundraising Strategy Considerations for Florida Nonprofits

Targeted Solicitation: Focus on states with similar or less restrictive requirements to manage costs.

Diversified Fundraising: Balance in-state and out-of-state efforts to maximize potential while minimizing compliance burdens.

Engaging Professionals: Seek support from legal and financial consultants who specialize in multi-state compliance to ensure accuracy and efficiency.

Conclusion

Compliance with Florida's financial review and audit requirements is crucial for nonprofit transparency and accountability. While financial reviews suffice for revenues between $500,000and $1,000,000, opting for an audit offers additional benefits in credibility,funding opportunities, and operational insights. Nonprofits soliciting funds outside Florida must also comply with other states' requirements, enhancing their reputation and trust. Consult a qualified CPA or financial advisor to determine the best course of action for your nonprofit's financial situation and compliance needs.

Take Action Now

Ensure your nonprofit meets all financial review and audit requirements. Contact a qualified CPA today to enhance your organization's credibility and unlock new funding opportunities!