How to request an audit of a nonprofit
A nonprofit audit request generally begins when the board or audit committee locates the reason for the evaluation. They look at rules from lender terms, state agencies, grantmakers, or federal funding obligations. Afterwards, the basic financial records are collected and they invite qualified CPA firms to bid on the work. If the organization spent $1,000,000 or more in federal awards during the year, federal single-audit rules apply.
What does requesting an audit of a nonprofit mean?
Asking for such a service means you are hiring an independent CPA firm to look over the organization's financial statements. As the National Council of Nonprofits notes, the independent CPA cannot be an employee of the organization. If the goal is to report suspected abuse of tax-exempt status, use Form 13909 or send a letter to the IRS instead.
Who can request a nonprofit audit?
The board has the primary oversight role. If the nonprofit has an audit committee, that group generally selects the auditor. Otherwise, the executive director along with the full board manage the nonprofit audit request. Outside parties — like banks, government agencies, grantmakers, or state charity regulators — also ask for audited statements. Federal rules mandate an audit once the award spending hits the $1,000,000 threshold.
What nonprofit audit requirements should you check?
Start by checking the rule or contract that triggers the audit. State laws dictate specific nonprofit audit requirements for fundraising registration. Lenders and foundations, as well as specific contracts, also demand audited financials. Separately, any organization spending $1,000,000 or more in federal awards in a fiscal year should undergo a single or program-specific audit under 2 CFR 200.501.
How to request a nonprofit audit
A successful nonprofit audit request varies with the defined purpose alongside clear boundaries.
Confirming the trigger
Check the bylaws, grant terms, loan documents, state filing rules, and federal funding level first. It indicates whether you require a financial statement audit, a single audit, or possibly a review instead.
Selecting who would oversee the process
The board might keep that role or it may delegate it to an audit committee. The people supervising the audit should not be the same people doing the day-to-day accounting.
The scope & deadline
State the fiscal year under audit, whether federal awards are covered, and when the final report should be issued. If a single audit is necessary, the engagement must cover the organization-wide necessity in line with the Uniform Guidance framework.
Collecting data before pricing
The trial balance, general ledger, bank reconciliations, grant agreements, major contracts, debt schedules, board minutes, and the prior year's report should be organized. Once the records are organized, firms can price the work more precisely.
Sending a focused nonprofit audit request
The National Council of Nonprofits recommends leveraging a request-for-proposals process, checking state CPA licenses, confirming nonprofit experience, asking for references, as well as peer review results. The nonprofit audit request should list the scope, deadline, reporting needs, and the main contact.
Comparing proposals & approving the engagement letter
Price is a factor, but not the only one. Consider the firm's specific nonprofit background, staff credentials, and availability, alongside proposal quality. The engagement letter should be read closely before signing, as it acts as the binding contract.
What should go in your email or nonprofit audit RFP?
The nonprofit audit RFP should address the questions a CPA firm will ask right away.
The details below should be covered:
- Legal name of the organization
- EIN and state of formation
- Fiscal year end
- Whether this is a first-year engagement or recurring
- Whether federal awards are involved
- Approximate revenue and assets as well as number of locations
- Deadline for fieldwork & the final report
- Primary contact person
- Request for references & relevant nonprofit background
A complete nonprofit audit request also asks if the firm holds a license in the state, has current nonprofit clients, and possesses single-audit experience if federal funds are in play.
What if you are trying to report a nonprofit instead of hire an auditor?
In the case of suspecting tax law abuse, use the IRS complaint system — rather than the independent audit process. It is possible to submit Form 13909 or a complaint letter by mail or email. The IRS inciates that state charity regulators & state tax agencies might also get involved — in parallel to the details. This is an entirely distinct process from hiring a CPA firm.
Dimov Audit is ready to service
Dimov Audit collaborates with US organizations that require a concrete start to the audit process. If you require us to draft the nonprofit audit request, need assistance in deciding between an audit or a review, or need a firm experienced with federal award rules, reach out to our team.
FAQs
How do you write an email asking for an audit?
The message must be brief. State the organization's name, fiscal year, reason for the work, and deadline, alongside if federal awards apply. Ask the firm about their nonprofit background, CPA license status, timeline & pricing method, and the documentation they need to bid.
Who can request an audit?
Internally, the board or audit committee or leadership team initiates the process. Externally, a funder, lender, government agency, or state regulator mandates the audited statements. For suspected tax abuse, the report is directly to the IRS by using Form 13909 — instead of hiring a CPA.
How to request an audit on a business?
The process obtains the same logical actions: verifying the reason for the work, defining the scope, collecting the financial records, and asking qualified CPA firms for a bid. The main distinction is the underlying generator — which generally comes from owners, investors & lenders, or business contracts.
