November 8th, 2023 Posted in Budget, Accounting

New York State Rules for Nonprofit Financial Audits

In New York, the rules governing when a financial audit is required for nonprofit organizations are primarily determined by the size and revenue of the organization. These rules are essential for maintaining transparency and accountability within the not-for-profit sector. Here's a breakdown of when a financial audit is mandated for nonprofits in New York:

  1. Annual Revenues Exceed $1,000,000: Nonprofit organizations in New York with annual revenues exceeding $1,000,000 are required to undergo an annual independent financial audit. This audit is a comprehensive examination of the organization's financial statements, internal controls, and compliance with applicable laws and regulations.

  2. Annual Revenues Between $250,000 and $1,000,000: Nonprofits falling within this revenue range must conduct an independent financial review or audit. While not as extensive as a full audit, a financial review is still a thorough examination of financial statements to ensure accuracy and compliance.

  3. Annual Revenues Less Than $250,000: Organizations with annual revenues below $250,000 are generally not mandated by the state to conduct independent financial audits or reviews. However, it is important to note that some grantors and donors may still require audits or reviews as a condition of funding, so it's a best practice to maintain financial transparency regardless of revenue size.

  4. Government Grants and Contracts: Nonprofits that receive significant government grants or contracts may also be subject to specific audit requirements imposed by the granting agencies. These requirements may necessitate audits even if the organization's revenues fall below the thresholds mentioned above.

  5. Board and Donor Expectations: Beyond state requirements, nonprofit organizations should consider the expectations of their boards, donors, and other stakeholders. Maintaining financial transparency through regular audits or reviews can foster trust and credibility, making it a wise practice even if not explicitly mandated by state regulations.

Compliance with these New York State rules is vital for nonprofit organizations to meet legal obligations and maintain the trust of their supporters. At SRG Advisors LLC, we have a deep understanding of these requirements and can help your nonprofit navigate the complexities of financial audits and reviews, ensuring that your organization remains in compliance with state regulations and donor expectations. We're here to assist you in achieving your mission while maintaining the highest standards of transparency and accountability.

Call SRG for more information!

CALL: 201-525-1222 x 5