By / July 16, 2024

Nonprofit organizations in Florida have a crucial responsibility to maintain transparency and accountability in their financial operations. To meet these obligations, nonprofits often need to prepare financial reports such as audits, reviews, or compilations. This guide provides a comprehensive overview of these requirements hiring a Florida Nonprofit CPA:

Why Financial Reports Matter

Financial reports are essential for nonprofit organizations for several reasons:

  • Transparency: They show donors and the public how the nonprofit is using its funds.
  • Accountability: They help ensure that the nonprofit is following the law and using donations appropriately.
  • Compliance: Filing accurate financial reports is a legal requirement in Florida, ensuring the organization operates within state regulations.
Florida Nonprofit CPA Requirements

Types of Financial Reports

There are three main types of financial reports that a nonprofit might need to prepare: audits, reviews, and compilations. Each serves a different purpose and has different requirements.

Audits

What is an Audit? An audit is a thorough examination of a nonprofit’s financial records conducted by an independent certified public accountant (CPA). It provides the highest level of assurance that the financial statements are free of material misstatements.

When is an Audit Required? In Florida, a nonprofit organization is required to conduct an audit if:

  • Annual contributions exceed $1 million.
  • The organization receives government grants or contracts that require an audit.

What Does an Audit Involve?

  • Verification of Financial Statements: The auditor examines financial statements to ensure accuracy.
  • Testing Internal Controls: The auditor tests the nonprofit’s internal controls to identify weaknesses.
  • Compliance Check: The auditor ensures that the nonprofit complies with relevant laws and regulations.
  • Audit Report: The auditor provides a report with their findings, which includes an opinion on the accuracy of the financial statements.

Benefits of an Audit

  • Provides high-level assurance to donors and stakeholders.
  • Identifies areas for financial and operational improvements.
  • Enhances credibility and trust in the organization.

Reviews

What is a Review? A review is a less intensive examination than an audit. It provides limited assurance that there are no material modifications needed for financial statements to be in conformity with generally accepted accounting principles (GAAP).

When is a Review Required? In Florida, a nonprofit might opt for a review or audit if:

  • Annual contributions more than $500,000 and less than $1 million.
  • Donors or lenders require it for assurance purposes.

What Does a Review Involve?

  • Analytical Procedures: The CPA performs analytical procedures to identify any unusual trends or anomalies.
  • Inquiries: The CPA makes inquiries of management and staff about financial information.
  • Review Report: The CPA provides a report stating that they are not aware of any material modifications needed.

Benefits of a Review

  • Less expensive and time-consuming than an audit.
  • Provides moderate assurance to stakeholders.
  • Helps identify potential issues without the depth of an audit.

Compilations

What is a Compilation? A compilation is the simplest form of financial statement preparation. It involves presenting financial information in the form of financial statements without providing any assurance on their accuracy.

When is a Compilation Required? In Florida, a nonprofit might opt for a compilation if:

  • Annual contributions below $500,000.
  • The organization needs basic financial statements for internal purposes or simple donor requirements.

What Does a Compilation Involve?

  • Data Presentation: The CPA compiles financial data provided by the organization into financial statements.
  • No Verification: The CPA does not verify the accuracy of the information or provide any assurance.
  • Compilation Report: The CPA includes a report stating that no assurance is provided.

Benefits of a Compilation

  • Least expensive option.
  • Useful for internal management and simple reporting needs.
  • Provides a basic financial overview.

Helpful Links | Florida NonProfit CPA

For more detailed information and resources, check out the following links:

Conclusion

Understanding and complying with financial reporting requirements is essential for the success and transparency of nonprofit organizations in Florida. Whether your nonprofit needs an audit, review, or compilation, each type of report serves to enhance trust and accountability. By following these guidelines and meeting the necessary deadlines, your organization can maintain good standing and continue to make a positive impact.

Scroll to Top