When does a nonprofit need an audit? State thresholds explained

Where do nonprofit audit requirements come from?

Filing Form 990, 990-EZ or 990-N never requires audited financial statements. Form 990 asks whether your statements were compiled, reviewed or audited, so donors and foundations can see the answer, but the IRS does not mandate an audit at any size. Every audit requirement comes from one of three places:

1. Federal grant rules, under the Uniform Guidance (2 CFR Part 200, Subpart F).
2. State law, usually the charitable solicitation registration rules in each state where you raise money.
3. Contracts and governing documents: grant agreements, loan covenants, government contracts, national affiliate rules and your own bylaws.

Check all three. Most nonprofits that are caught off guard missed the second or the third.

When do federal grants require an audit?

A nonprofit that expends $1,000,000 or more in federal awards during a fiscal year beginning on or after October 1, 2024 must have a Single Audit under 2 CFR 200.501. For fiscal years that began earlier, the threshold was $750,000. Three details matter:

• Spending, not awards. A $2 million, three-year grant with $600,000 spent this year counts as $600,000.
• All federal programs combined. Several small federal awards are added together.
• Pass-through money counts. Funds from a state agency, county, city or another nonprofit count if they are federal underneath. Look for an Assistance Listing number on the award.

The Single Audit report is due to the Federal Audit Clearinghouse within 30 days after you receive the auditor's report, or nine months after year-end, whichever is earlier. We cover it in detail in Single Audit: what changes when you spend $1 million in federal awards.

State-by-state rules: Virginia, New York, Florida, California and Texas

About half the states require registered charities to submit reviewed or audited financial statements above a threshold. These are the five we work with most.

Virginia

Regulator: Virginia Department of Agriculture and Consumer Services (VDACS), Office of Charitable and Regulatory Programs.

Rule: Virginia does not set a revenue-based audit threshold for charitable registration. When registering or renewing, a charity generally submits its IRS Form 990 (or 990-EZ / 990-PF) or certified audited financial statements. A small organization that files only Form 990-N may submit a treasurer's report instead.

In practice: Virginia nonprofits get audited because of federal grants, Virginia state agency grants, local government contracts (counties and cities often require audits from funded nonprofits), lenders and bylaws. Read the audit clause in each agreement.

New York

Regulator: Attorney General's Charities Bureau, through the annual CHAR500 filing.

Rule, based on gross revenue and support:

• More than $1,000,000: an independent CPA audit.
• More than $250,000, up to $1,000,000: an independent CPA review (an audit also satisfies it).
• $250,000 or less: an unaudited financial report.

Also note: under New York's Not-for-Profit Corporation Law, organizations required to file an audit must have the board or a committee of independent directors oversee the audit, including selecting the auditor and reviewing the results. The audit threshold rose from $750,000 to $1,000,000 effective July 1, 2021. See our New York nonprofit audit guide.

Florida

Regulator: Florida Department of Agriculture and Consumer Services (FDACS), under Florida Statute 496.407.

Rule, based on annual contributions:

• $1,000,000 or more: audited by an independent CPA.
• $500,000 to under $1,000,000: reviewed or audited by an independent CPA.
• Under $500,000: a compilation, review or audit is optional.

Also note: FDACS can require an audit or review of any financial statement if it finds discrepancies or inconsistent information. An audited or reviewed statement must be accompanied by the CPA's signed report.

California

Regulator: Attorney General's Registry of Charities and Fundraisers, under the Nonprofit Integrity Act (Government Code 12586).

Rule: charitable corporations, unincorporated associations and trustees that file with the Attorney General and have gross revenue of $2,000,000 or more in a fiscal year must prepare annual financial statements audited by an independent CPA under GAAP and generally accepted auditing standards.

• Government grant exclusion: grants and contracts from government entities are left out of the $2,000,000 calculation if the government agency requires an accounting of how the funds were used.
• Audit committee: charitable corporations required to be audited must have an audit committee appointed by the board. Staff can't serve on it, and committee members who are also on a finance committee must be fewer than half the audit committee.
• Public availability: the audited statements must be available to the Attorney General and the public within nine months after year-end.
• Exemptions: religious organizations, educational institutions and hospitals are generally exempt.

There is no state review tier. Below $2,000,000 California does not require an audit or review, though funders often do.

Texas

Regulator: none for general charitable solicitation. Texas has no statewide charity registration and no general audit threshold for nonprofits.

In practice: Texas nonprofit audits are driven by state grants. Many Texas state agency grant agreements require a single audit under the Texas Grant Management Standards (TxGMS) when the nonprofit's state award expenditures reach a set amount, commonly $750,000, in addition to any federal Single Audit. The exact threshold and deadline are in each grant's audit clause.

State thresholds at a glance

Other states use different numbers. See our free state guides.

How each state measures size, and why it matters

The thresholds look similar, but they measure different things. That is the most common reason nonprofits get the answer wrong.

• Contributions only (Florida): donations and grants. Program service fees, event ticket revenue beyond the charitable portion and investment income generally don't count. A fee-for-service nonprofit with $3 million in revenue but $400,000 in donations may need nothing in Florida.
• Gross revenue and support (New York): almost everything, including program fees, government grants and contributions.
• Gross revenue minus qualifying government grants (California): a nonprofit funded mostly by government contracts can fall below $2,000,000 even with a much larger budget.
• One big year counts. A bequest or capital campaign gift can push a small organization over a threshold for a single year.

Three worked examples

What if you're registered in several states?

A nonprofit that fundraises online or by mail may register in many states, and each state applies its own threshold to the same set of financial statements. In practice, the strictest state sets your requirement. One audit can then be filed in every state, along with any review-level requirements. Keep a list of every state where you're registered, its measure (contributions or revenue), its threshold and its due date.

Funders, lenders and bylaws

• Foundations often require an audit above a grant size or budget size, and many ask for the audit with every renewal application.
• State and local governments frequently require audits, program-specific audits or agreed-upon procedures in their contracts, often at lower thresholds than the federal rule.
• Banks set reporting levels in loan covenants, usually with a deadline such as 120 or 180 days after year-end.
• National affiliates often require chapters to provide audited or reviewed statements to the parent organization.
• Bylaws that say "annual audit" bind you until the board amends them.

A 6-step check to find your requirement

1. Total your federal spending for the fiscal year, including pass-through funds. $1,000,000 or more means a Single Audit.
2. List every state where you're registered to fundraise, and the measure and threshold each one uses.
3. Calculate your figure for each state's measure: contributions for Florida, gross revenue and support for New York, gross revenue minus qualifying government grants for California.
4. Read every active grant, contract and loan agreement for an audit or review clause and its deadline.
5. Check your bylaws and any national affiliate requirements.
6. Pick the highest level any source requires. A higher level always satisfies a lower one.

Common mistakes

• Using the wrong revenue measure, for example testing Florida's contributions threshold against total revenue.
• Forgetting pass-through federal money when testing the Single Audit threshold.
• Testing awards instead of spending for federal funds.
• Ignoring smaller registration states where you solicit online.
• Engaging an auditor after year-end, especially for a first audit, which takes longer because opening balances must be tested.

What if you've missed a required audit?

It happens more often than people think, and it is fixable. Engage an auditor right away and tell the regulator or funder you're working on it, since most will work with you. A missing Single Audit can lead federal agencies or pass-through entities to delay payments or limit future funding. A missing state filing can delay or suspend your registration, which affects whether you can legally solicit there. Getting current quickly matters more than the delay itself. Our first-audit checklist helps you get organized fast.

Frequently asked questions

GreyWood CPA PLLC is a licensed CPA firm headquartered in Richmond, Virginia (Virginia Board of Accountancy firm license #134961), serving nonprofits, community associations and businesses nationwide. This article is general information as of October 28, 2026, not legal or tax advice for a specific organization. Rules change, so confirm current requirements before acting.