Who can see a nonprofit audit report and what is inside it
The IRS requires a tax-exempt organization to make its Form 990 available on request, and sets no comparable rule for the audit report. If a grantor has asked you for one, or you are reading one you did not write, start here.
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Are nonprofit audit reports public record
Donor names.
A public charity can leave contributor names and addresses out of the copy it hands over. A private foundation filing Form 990-PF cannot.
State charity registration.
A state can require charities to file audited financial statements with its attorney general to register or renew, and those filings can be public even though the IRS does not ask for them.
Federal disclosure is the floor for nonprofit transparency requirements. States and funders can require more, and nonprofit financial transparency beyond that is a board decision.
What a nonprofit audit report contains
Management prepares the financial statements and notes, and your auditor issues the report on them. You receive both in one bound package, and a not for profit audit report is the same package under another name.
Independent auditor's report.
One or two pages at the front with the opinion. Read this before anything else.Statement of financial position.
The balance sheet, with net assets split into the part donors restricted and the part they did not.Statement of activities.
Revenue, expenses and the change in net assets across the year.Analysis of functional expenses.
Expenses split across program, management and fundraising, presented in a separate statement, inside the statement of activities, or in the notes.Statement of cash flows.
Where the cash came from and where it went, which is a different number from the change in net assets.Notes to the financial statements.
Accounting policies, commitments, related-party transactions and other disclosures management provides under the reporting framework.
Your auditor may also issue a management letter covering significant deficiencies, material weaknesses and other recommendations. Ask for it by name, because your auditor sends it as a separate document.
What the management letter grades mean
Deficiency in internal control over financial reporting.
The design or operation of a control does not allow management or employees, in the normal course of their work, to prevent, or detect and correct, misstatements on a timely basis.
Significant deficiency.
A deficiency, or a combination of deficiencies, less severe than a material weakness yet important enough to merit the board's attention.
Material weakness.
A deficiency, or a combination of deficiencies, such that there is a reasonable possibility that a material misstatement of the organization's financial statements will not be prevented, or detected and corrected, on a timely basis.
Under AU-C 265 the auditor must add an alert restricting the letter's use. The AICPA's model wording limits the letter to management, the board, others within the organization and a government agency the auditor must report to. A nonprofit may still choose to share it with a funder, and a funder may ask for it.
Where to find a nonprofit's financial information
Each document has its own access rule. The Form 990 is public on request. The audited financial statements are not, unless the nonprofit or its state regulator publishes them. The Single Audit reporting package is public once the organization spends $1,000,000 or more in federal awards in a year.
Where to find a nonprofit's financial information
Form 990, audited statements and the Single Audit package
Form 990
Annual information return
PublicThe nonprofit must let anyone inspect its last three filings and provide copies on request.
Where to look
- The nonprofit, on request
- IRS Tax Exempt Organization Search
Audited financial statements
Opinion, statements and notes
Not public by federal ruleNo federal rule requires release. Several states require filing with the attorney general to register.
Where to look
- Ask the nonprofit
- State charity registry, where required
Single Audit reporting package
Statements plus federal compliance
Public at $1,000,000+Required once the organization spends $1,000,000 or more in federal awards in a year.
Where to look
- Federal Audit Clearinghouse
- fac.gov
Dimov Audit. Federal rules only. State charity registration requirements vary.
Why the Form 990 and the audited statements show different numbers
A nonprofit can report different revenue and expense totals on its Form 990 and in its audited financial statements, because it prepares the two under different rules. It reports unrealized gains on investments, donated services and use of facilities, and recoveries of prior year grants on one document and not on the other.
The IRS built the reconciliation into the form. On Schedule D, Parts XI and XII, the organization reconciles revenue and expenses per its audited financial statements to the figures on the return. If you are holding both documents and the totals differ, read that schedule first.
What the auditor's opinion means
Unmodified opinion.
The auditor concluded the statements are fairly presented in all material respects. Check your grant terms for whether the funder requires that result.
Modified opinions and going concern.
The auditor issues a qualified opinion, an adverse opinion or a disclaimer of opinion in different circumstances, and can add a going concern section to an unmodified opinion as well. Ask the finance director which of these applies and what it means for the financial statements.
Who audits nonprofit organizations is your next check. The opinion should come from a licensed CPA firm, so read the signature page before you rely on it.
What to send when a grantor requests audited financial statements
Send us the funding condition or the grant clause behind the request. We will tell you which of an audit, a review or a compilation your funder will accept, and quote the one you need.
How to request an audit of a nonprofit
You can find a nonprofit's audited figures in three places. Ask in this order:
The organization.
A nonprofit can send the report or point you to a published copy. Put the request in writing and say whether you are a donor, a grantor or a member.The Federal Audit Clearinghouse.
Where the organization spent $1,000,000 or more in federal awards in a year, it submits its Single Audit reporting package to the Federal Audit Clearinghouse, with the audited financial statements and the auditor's reports inside it, and the package is public there.The state charity regulator.
Where a state requires charity registration, its attorney general or charity bureau may hold the audited statements on file.
If a funder is asking you for the report, start with our nonprofit audit services.
George Dimov on turning work down:
Anytime that we have a client that brings up a situation that we think is ethically incorrect or there's a possibility of some type of a rule that's broken, we immediately disengage, only because, you know, for license purposes... but also just for pure ethics too. It's just not a side of anything that I want to be involved in.
On audit work for grant-funded programs:
Dimov Audit's work provided us with the confidence and clarity we needed for our grant-funded programs. Their audit process was thorough, efficient, and instrumental in helping us maintain full compliance with nonprofit reporting standards.
Related services
- Nonprofit audit services
- Financial statement audits
- Church audits
- Attestation services
- Nonprofit audit cost
Treat the information here as general, not advice for your circumstances. Ask a CPA to look at your facts before you rely on it.
Ask us to scope your nonprofit audit
Tell us your federal funding, your grant deadlines and whether your books are closed for the year. We will come back with a scope, a timetable and a fee.
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Reviewed by George Dimov, CPA. Dimov Audit audits nonprofit organizations and their federal awards across all 50 states. George brings 20+ years of accounting and consulting experience. Profile