- admin@RoseGroup.cpa
- 919-913-8081
At Rose Group CPAs, we serve a wide range of nonprofit organizations—including Federally Qualified Health Centers, member organizations, mental health providers, and others committed to serving their communities. As a nonprofit organization, transparency and accountability are central to your mission. Your donors, grantors and contributors rely on you to be good stewards and use your resources wisely. An audit is often required to demonstrate that stewardship—it’s also a significant undertaking. That is why we want our clients to understand what an audit is (and isn’t), when it’s required, and how to prepare for it.
Not every nonprofit needs an audit every year. An audit becomes necessary under certain conditions, such as:
Grant documents usually specify when an audit is required. Under federal guidelines, once an organization expends $750,000 or more in Federal funds during a fiscal year, an audit under the uniform guidance is required. This includes both a financial statement audit and a compliance audit component, which increases the time and cost involved.
Many states require an independent audit once an organization’s revenue exceeds a certain threshold. For example, in many states, that threshold is $500,000 or $1 million in gross revenue. We recommend checking your specific state requirements (or reaching out to us—we can help).
If your only reason for an audit is that your bylaws require one, you might consider amending them. Audits are valuable, but they are also expensive. They take resources both financially and in time. Audits do not directly contribute to the Organizations overall mission. If the results of the audit aren’t being used to fulfill another requirement—such as securing funding, complying with regulations, or demonstrating financial health to funders—it may be time to shift your resources toward more impactful compliance or financial review strategies.
A well-prepared audit begins with organized records and clear communication. Here are the most important steps:
Ensure your financial records are fully closed for the fiscal year, reconciled, and free of large, unexplained balances. Your trial balance should be final, not a moving target.
Every significant balance should be backed by appropriate support. This includes:
Auditors will evaluate your internal controls. Be ready to discuss how your organization handles:
Auditors assess these controls as part of their risk analysis.
Your organization is subject to a Uniform Guidance audit, you’ll also need to prepare a Schedule of Expenditures of Federal Awards (SEFA). This is a separate report that identifies all federal funding received and how it was spent. Preparing this schedule accurately is essential for compliance.
We recommend using a checklist and starting preparations well in advance—at least 60 days before the expected audit fieldwork date. A checklist can go a long way in reducing stress and keeping things on track.
Absolutely. If you’re not legally or contractually obligated to have a full audit, there are other service levels that may meet your needs more efficiently:
A review is less in scope and provides limited assurance that your financial statements are free from material misstatement. The CPA performs analytical procedures and inquiries, but doesn’t conduct the full testing that comes with an audit. Reviews do not have an internal control or risk assessment requirement that an audit does. A review may be a great option for organizations that want assurance but don’t need to meet strict regulatory requirements.
An AUP engagement is highly customizable and tailored to your needs. The Organization’s board of directors and management work with the CPA to agree in advance on specific procedures to perform—such as testing grant compliance, reviewing expense classifications, or confirming certain balances. This is recommended when there is not an audit requirement and the Organization has a specific identified need.
Audits are not just a regulatory checkbox—they’re an opportunity to build trust and reinforce your organization’s credibility– but it should also make sense in the context of your mission, budget, and regulatory environment. At Rose Group CPAs, we help nonprofit leaders evaluate whether an audit is the right fit—and if not, we guide them to the right alternative.
If you’re not sure what level of assurance your organization really needs—or if you’re preparing for your next audit—reach out. We’re here to guide you every step of the way.
Contact Us Today to schedule a call and see how our team can support you!
120 Mosaic Boulevard,
Suite 200
Pittsboro, NC 27312
ERO@RoseGroup.cpa
919-913-8081
101 Cosgrove Ave,
Suite 260
Chapel Hill, NC 27514
Admin@RoseGroup.cpa
919-913-8081
3119-A Crawfordville Highway,
Crawfordville, FL 32327
Info@RoseGroup.cpa
850-759-5080