What is the meaning of the MIAs by laws that requires the auditor to be independent?

Does your state's law require an independent audit?

You may wonder if your state's laws require a charitable nonprofit to conduct an independent audit.

  • Remember that some private foundations may require or expect a nonprofit grantee to conduct an independent audit;
  • A few states have laws that require nonprofits that receive a certain level of state funding to submit independent audits to the state agency that provided the funding or to other state agencies. If your nonprofit receives any government funds --state or federal -- it is always a good idea to determine whether there is an accompanying  audit requirement.
  • Some state government contractsmay require an audit; there is a federal requirement to conduct an independent audit if the nonprofit expends $750,000 or more in federal funds in a single year.
  • Many states require charitable nonprofits to submit a copy of audited financial statements in conjunction with the process of registering the nonprofit so that it is able to lawfully engage in fundraising activities in that state (commonly known as "charitable registration").

State laws regulating independent audits are different in each state.

The obligation to file an independent audit report with the state government is generally just one requirement among many in connection with charitable solicitation registration. Thirty-nine states (plus the District of Columbia) require charitable nonprofits to register with the state in order to fundraise in that state. Remember that state laws often differ from one another. Consequently, the laws that require a charitable nonprofit to submit audited financial statements also vary state-by-state. 

  • The majority of states have laws requiring charitable nonprofits to conduct an independent audit under certain circumstances. The requirement for a nonprofit to submit audited financial statements to the state is most often triggered by either the total revenue received by the charitable nonprofit during the fiscal year, or the total contributions received. In some states the threshold of contributions or income received that triggers the independent audit requirement is relatively low; in other states the threshold is higher.
  • The majority of states also require annual submission of audited financial statements in connection with renewal of charitable registration.
  • These requirements for both initial and annual submission of audited financial statements may not apply to your nonprofit even if it is operating in a state where audit requirements exist since the requirements depend on specific circumstances, such as the amount of revenue contributed or the annual gross income of the charitable nonprofit - such details are specified in each state's law.

This Nonprofit Audit Guide© provides links to the state laws that address auditsso that you can determine what your state requires. Remember that this chart only addresses state law requirements, and that your nonprofit may also be required to submit an independent audit report to private funders upon request, and will be subject to federal audit requirements if it expends more than $750,000 in federal funds in a single year. Some state government contracts may also include the requirement to conduct an independent audit.

Click on a state in the map below to find a link to the state law that governs audit requirements (if applicable) for charitable nonprofits in that state. In some cases we provide links to the language of state laws that require other reports be filed with the state, such as an "annual financial report." Remember that if your nonprofit is registering for charitable solicitation purposes in states other than its own, you should check the requirements for audits in those other states.

State Law Nonprofit Audit Requirements: 50-State Chart

What is the meaning of the MIAs by laws that requires the auditor to be independent?

 (Updated as of August 2022)

Disclaimer: The National Council of Nonprofits is not engaged in the practice of law and this chart does not constitute legal advice. We encourage you to consult with legal, tax, or other professional advisors who can provide guidance for your charitable nonprofit’s individual circumstances. (For additional information on certain terms, hover your arrow over the blue "i" icon.)

Alabama

Audit Required: Nostate law requirement.
Statute and Description: Alabama Code § 13A-9-71

Alaska

Audit Required: Yes
Statute and Description: Alaska Admin. Code 2.45.010 requires nonprofits that receive state financial assistance and expend a cumulative total equal to or greater than $750,000 during the entity's fiscal year to submit an annual single audit. Nonprofits receiving money from the state of Alaska that don’t meet the requirements under 2 AAC 45.010 must submit an independent audit every two years.  7AAC 78.230. See Audit Guide and Compliance Supplement for State Single Audits.

Arizona

Audit Required: No state law requirement.
Statute and Description: Ariz. Rev. Stat. § 10-11622

Arkansas

Audit Required: Yes
Statute and Description: Ark. Code §4-28-403(b) | A charitable organization with gross annual revenue

What is the meaning of the MIAs by laws that requires the auditor to be independent?
over $500,000 must file an audited financial statement prepared by an independent CPA. Exemptions: Ark. Code Section 4:28:404.

California

Audit Required: Yes
Statute and Description: Cal. Gov. Code §12586(e)(1) | A charitable corporation with gross annual revenue

What is the meaning of the MIAs by laws that requires the auditor to be independent?
of $2 million or more AND that is already required to file report(s) with the General Attorney must file an audited financial statement prepared by an independent CPA.

Colorado

Audit Required: No state law requirement.
Statute and Description: Colo. Rev. Stat. § 6-16-104 

Connecticut

Audit Required: Yes
Statute and Description:Conn. Gen. Stat. § 21a-190c(b) | A charitable organization with gross annual revenue

What is the meaning of the MIAs by laws that requires the auditor to be independent?
over $500,000 must file an audited financial statement prepared by an independent CPA.

Delaware

Audit Required: No state law requirement
Statute and Description: Del. Code tit. 6 § 25-10

District of Columbia

Audit Required: No state law requirement.
Statute and Description: D.C. Code § 29

Florida

Audit Required: Yes
Statute and Description: FL Ch. 496.407  requires audits for charitable organizations as follows: For those receiving annual contributions of $1 million or more an independent audit is required; for those with annual contributions of at least $500,000  but less than $1 million,  the financial statements may be reviewed or audited by an independent CPA, and for those with less than $500,000 in annual contributions, a compilation, audit, or review of the financial statement is optional.

Georgia

Audit Required: Yes
Statute and Description: Ga. Code Ann. § 43-17-5(b)(4) | A charitable organization with contributions over $1 million during its preceding fiscal year must file an audited financial statement prepared by an independent CPA.  A charitable organization with contributions less than $1 million but more than $500,000 in its preceding fiscal year must have its financial statement reviewed by an independent CPA. Exceptions: Ga. Code Ann. § 43-17-9

Hawai'i

Audit Required: Yes
Statute and Description: Haw. Rev. Stat. § 174: 467B-6.5(b) | A charitable organization required to obtain an audit report by a governmental authority or a third party must file an audited financial statement prepared by an independent CPA. All other charitable organizations with gross revenue exceeding $500,000 in the year covered in the report are required to obtain an independent audit, however, "gross revenue" does not include grants or fees from government agencies or revenue derived from funds held in trust for the benefit of the organization.

Idaho

Audit Required: No state law requirement.
Statute and Description: Idaho Code Ann. § 30-3-136

Illinois

Audit Required: Yes
Statute and Description: 225 Ill. Comp. Stat. § 460/4 | A charitable organization with annual contributions

What is the meaning of the MIAs by laws that requires the auditor to be independent?
over $300,000 must file an audited financial statement prepared by an independent CPA. A charitable organization with contributions less than $300,000 and more than $25,000 is only required to file an audited financial statement prepared by an independent CPA if a professional solicitor
What is the meaning of the MIAs by laws that requires the auditor to be independent?
engages in fundraising. For more information contact Forefront, the state association of nonprofits in Illinois, and see their fact sheet on SB 172 (2022) - Audit Threshold for Charitable Organizations.

Indiana

Audit Required: "Examination" (similar to an audit) required in certain circumstances for the use of public money.
Statute and Description: Indiana Code § 5-11-1-9 | Use of public money by certain entities, including nonprofits, requires an examination. A tentative waiver may be available for entities whose financial assistance disbursements are less than 50% of their total and nonprofits whose financial assistance disbursements are equal to or greater than 50% but less than $750,000. See Guidelines for Examination of Entities Receiving Financial Assistance from Governmental Sources. 

Iowa

Audit Required: No state law requirement.
Statute and Description: Iowa Code § 504.1613

Kansas

Audit Required: Yes
Statute and Description: Kan. Stat. Ann. § 17-1763(c) | A charitable organization with annual contributions over $500,000 must file an audited financial statement prepared by an independent CPA.

Kentucky

Audit Required: No state law requirement.
Statute and Description: Ky. Rev. Stat. Ann. § 14A.6-010 | (See also Ky Rev. Stat. Title XXIII § 273.470 re: entities organized for charitable purposes related to disasters; requirement for filing financial reports when contributions exceed $25,000).

Louisiana

Audit Required:Yes, in certain circumstances, if receiving state funds.
Statute and Description:La. Rev. Stat. Ann. § 24:513(J)(1)(c) | A nonprofit that meets the definition of “quasi-public agency”

What is the meaning of the MIAs by laws that requires the auditor to be independent?
will be required to conduct an annual independent audit if the nonprofit receives $500,000 or more in revenues in any one fiscal year; a financial review is required if annual revenue is $200,000 or more but less than $500,000; a compilation is required if annual revenue is $50,000 or more but less than $200,000. See LA State Audit Guide for more information.

Maine

Audit Required: Yes
Statute and Description: A charitable organization must be licensed in Maine. The license application does not require an audited financial statement. However, the license must be renewed annually. Me. Rev. Stat. Ann. tit. 9 § 5004(4)(C-D) A charitable organization is only required to file an audited financial statement if the organization already has one in existence at the time of renewal or applies for renewal after the expiration date. Otherwise, the organization may file a balance sheet in lieu of an audited financial statement. Exceptions: Me. Rev. Stat. Ann. Title 9 § 5005

Maryland

Audit Required: Yes
Statute and Description: MD Solicitations Act §6-402 (b)(7) | A charitable organization must file an audited financial statement prepared by an independent CPA if the gross income from charitable contributions is at least $750,000. For organizations with gross annual contributions between $300,000-$750,000 financial statements must be reviewed or audited by an independent CPA. See Annual Audits: State Requirements and Best Practices, Maryland Nonprofits, for more information.

Massachusetts

Audit Required: Yes
Statute and Description: Mass. Gen. Laws ch. 12, § 8F | A public charity with gross annual support and revenue

What is the meaning of the MIAs by laws that requires the auditor to be independent?
over $200,000 must file an audited financial statement prepared by an independent CPA together with its annual report. BUT, a public charity with gross annual support and revenue not more than $500,000 may file a financial statement accompanied by an independent certified public accountant's review report in lieu of an independent audit.

Michigan

Audit Required: Yes
Statute and Description: Mich. Comp. Laws § 400.273 Sec 3(2)(j) | A charitable organization with annual contributions of $500,000 or more must file an audited financial statement prepared by an independent CPA. A charitable organization with annual contributions less than $500,000 and at least $250,000 must file a financial statement that is either reviewed or audited by an independent CPA.

Minnesota

Audit Required: Yes
Statute and Description: Minn. Stat. § 11.309.53(3) | A charitable organization with total annual revenue

What is the meaning of the MIAs by laws that requires the auditor to be independent?
over $750,000 must file an audited financial statement prepared by an independent CPA.

Mississippi

Audit Required: Yes
Statute and Description: Miss. Code Ann. § 79-11-507 | As part of its annual registration requirement (unless exempted per Miss. Code Ann. Section 79-11-505(1)), a charitable organization with annual contributions between $250,000-$500,000 must file a financial statement reviewed or audited by an independent CPA when all of the solicitations and fund-raising functions are conducted solely by volunteers. The Secretary of State may require an audited financial statement prepared by an independent CPA if the organization’s annual revenue is at least $25,000. NOTE: Every charitable organization that uses a professional solicitor

What is the meaning of the MIAs by laws that requires the auditor to be independent?
for its fundraising functions must file an audited financial statement prepared by an independent CPA. See Mississippi's Charities Online for more details.

Missouri

Audit Required: No state law requirement.
Statute and Description: Mo. Rev. Stat. § 355.821.1

Montana

Audit Required: No state law requirement.
Statute and Description: Mont. Code Ann. § 35-2-904

Nebraska

Audit Required: No state law requirement.
Statute and Description: Neb. Rev. Stat.§ 21-1903

Nevada

Audit Required: No state law requirement.
Statute and Description: Nev. Rev. Stat. § 82.536

New Hampshire

Audit Required: Yes
Statute and Description: N.H. Rev. Stat. Ann. § 7:28(III-b) | A charitable organization with revenue, gains, and other support of $2 million or more must file an audited financial statement prepared by an independent CPA; nonprofits receiving support of $500,000 or more must submit “the organization's latest financial statement prepared in accordance with generally accepted accounting principles.” Note: If compliance would constitute a financial burden, nonprofits may request an exemption, which, if granted, is valid for 3 years.

New Jersey

Audit Required: Yes
Statute and Description: N.J. P.L. 2021 c. 381 | An annual charities registration for a charitable organization with revenue, gains, and other support, but excluding non-monetary in-kind donations, of $1 million or more must be accompanied by an independent audit. For those with gross revenue between $25,000 and less than $1 million, the financial statements must be certified by the organization's president or other authorized officer. (This law is new as of January 2022. Consult the NJ Center for Nonprofits for details.)

New Mexico

Audit Required: Yes
Statute and Description: N.M. Stat. § 57-22-6 | A charitable organization that has revenue in excess of $500,000 "shall be audited by an independent auditor."

New York

Audit Required: Yes
Statute and Description: N.Y. EXC. Law 7A § 172-b| A charitable organization with gross annual revenue over $1,000,000 must file an audited financial statement prepared by an independent CPA. A charitable organization with gross annual revenue less than $250,000 must file a financial statement but it does not need to be one reviewed by an independent CPA; organizations with gross annual revenue of between $250,000-$1,000,000 must file a financial review prepared by an auditor. Every charitable organization that uses a professional solicitor

What is the meaning of the MIAs by laws that requires the auditor to be independent?
in its fundraising functions must file an audited financial statement prepared by an independent CPA.

North Carolina

Audit Required: Yes, in certain circumstances, if receiving state funds.
Statute and Description: N.C.G.S. 159-40 | A non-governmental entity that receives $500,000 or more annually in state funds

What is the meaning of the MIAs by laws that requires the auditor to be independent?
, must submit a  "Yellow Book" Audit done by CPA that includes a Schedule of Federal and State Awards. The complete report to the funding agency and to the Office of the State Auditor is due within 9 months of organization's year end. Note: An A-133 audit may be substituted for the yellow book audit. Additionally, the State Auditor may conduct an investigation of any nonprofit that receives $1,000 or more in state grant funds and in connection with that review counties and municipalities may require nonprofits receiving at least $1,000 in local grants to conduct an independent audit. .

North Dakota

Audit Required: No state law requirement.
Statute and Description: N.D. Cent. Code § 50-22-04

Ohio

Audit Required: No state law requirement.
Statute and Description: Ohio Rev. Code § 1716.04

Oklahoma

Audit Required: No state law requirement.
Statute and Description: Okla. Stat. tit. 18, § 18-552.3

Oregon

Audit Required: No state law requirement.
Statute and Description: Or. Rev. Stat. § 65.787

Pennsylvania

Audit Required: Yes
Statute and Description: 10 Pa. Cons. Stat. §162.5 (f) | A charitable organization with annual contributions of $750,000 or more must file an audited financial statement prepared by an independent CPA. A charitable organization with annual contributions less than $750,000 and at least $250,000 must file a financial statement that is reviewed or audited by an independent CPA. A charitable organization with annual contributions less than $250,000 and at least $100,000 must have a compilation, review, or audit of its financial statements prepared by an independent CPA.

Rhode Island

Audit Required: Yes
Statute and Description: R.I. Gen. Laws § 5-53.1-4 | All charitable organization are required to submit audited financial statements, but those with gross annual income of $500,000 or less  may meet the financial filing requirements by providing either an IRS Form 990, or financial statements for the immediately preceding fiscal year compiled by an independent public or certified accountant.

South Carolina

Audit Required: Nostate law requirement.
Statute and Description: S.C. Code Ann. § 33-56-30

South Dakota

Audit Required: Nostate law requirement.
Statute and Description: S.D. Codified Laws § 47-24-6 and 59-11-24

Tennessee

Audit Required: Yes
Statute and Description: Tenn. Code Ann. § 48-101-506(b)(2) | A charitable organization with gross annual revenue

What is the meaning of the MIAs by laws that requires the auditor to be independent?
over $500,000 (excluding grants from government agencies and private foundations) must file an audited financial statement prepared by an independent CPA.

Texas

Audit Required: Nostate law requirement.
Statute and Description: Tex. Bus. & Org. Code § 22.352 | A charitable organization must maintain current and accurate financial records in accordance with GAAP. Based on these records, the board should prepare or approve a financial report that conforms to AICPA standards. The financial report must be made available to the public (§ 22.353(b)). Exemptions (§ 22.355).

Utah

Audit Required: Nostate law requirement.
Statute and Description: Utah Code § 16-6a-1607

Vermont

Audit Required: Nostate law requirement.
Statute and Description: Vt. Stat. Ann. tit. 11B, § 16.22

Virginia

Audit Required: Yes
Statute and Description: Va. Code Ann. § 58.1-609.11(C)(4) | A nonprofit organization with gross annual revenue of $1 million or more may be required to provide an audited financial statement prepared by an independent CPA. A nonprofit entity with gross annual revenue less than $1 million and at least $750,000 must provide a financial review by an independent CPA.

Washington

Audit Required: Yes
Statute and Description:  Wash. Rev. Code § 434-120- 107 | A charitable organization with an annual gross revenue exceeding $3 million over the three preceding, fiscal years must file an audited financial statement prepared by an independent CPA. NOTE: Disclosure Requirement: A charitable organization with annual gross revenue of less than $3 million and more than $1 million averaged over the three preceding fiscal years must disclose to the public either an audited financial statement prepared by an independent CPA or a federal financial reporting form (e.g., IRS Form 990) prepared by an independent CPA. Reporting requirements explained.

West Virginia

Audit Required: Yes
Statute and Description: W. Va. Code § 29-19-5(a)(6)(A)-(B) | Charitable organizations with annual contributions

What is the meaning of the MIAs by laws that requires the auditor to be independent?
over $500,000 must file an audited financial statement prepared by an independent CPA. Charitable organizations with annual contributions in excess of $300,000 but not more than $500,000 must file a financial statement reviewed by an independent CPA.

Wisconsin

Audit Required: Yes
Statute and Description: Wis. Stat. § 202.12| A charitable organization with annual contributions over $500,000 must file an audited financial statement and include the opinion of an independent CPA.  A charitable organization with annual contributions less than $500,000 and over $300,000 must file a financial statement reviewed by an independent CPA.

Wyoming

Audit Required: Nostate law requirement.
Statute and Description: Wyo. Stat. § 17-19-1630

Nonprofit Audit Guide© Home

What does it mean that an auditor should be independent?

To be independent, the auditor must be intellectually honest; to be recognized as independent, he must be free from any obligation to or interest in the client, its management, or its owners.

What is the main objective of the MIA by

Aim of By-Laws: Set a standards of conduct for members in view of the professional responsibilities and duties owed by all members whether in public practice or otherwise, to their clients, employers, the authorities and the public.

How independent is the independent auditor?

An Independent auditor is an independent person who is not associated with the company by any means and is appointed by the company with the consent of the board of directors. He may be a chartered accountant or certified public accountant.

Which of the following should be independent of the financial statement audit client?

Accordingly, for financial statement audit clients,* the members of the assurance team, the firm and network firms are required to be independent of the financial statement audit client.