The answer depends on the reason the audit is being requested. This article is limited to the financial reporting and audit requirements that apply under the Florida Department of Agriculture and Consumer Services, commonly referred to as FDACS, for charitable solicitation registration purposes.
This article does not address other possible audit requirements, including:
- Federal Single Audit requirements;
- State or local grant audit requirements;
- Donor-imposed audit requirements;
- Lender or bond covenant requirements;
- Board-designated audit policies;
- Requirements under other states’ charitable solicitation laws.
A nonprofit may have no FDACS audit requirement and still need an audit for another reason.
What FDACS Regulates
FDACS administers Florida’s charitable solicitation rules under Chapter 496, Florida Statutes. These rules apply to many organizations that solicit charitable contributions in Florida and require certain public disclosures about solicitations and the use of contributed funds.
Under Florida law, a charitable organization or sponsor that is required to initially register or annually renew its registration with FDACS must file financial information for the immediately preceding fiscal year.
The Key Point: FDACS Looks at “Annual Contributions”
For FDACS purposes, the audit or review threshold is generally based on annual contributions, not necessarily total revenue.
Florida law defines a “contribution” broadly as a promise, pledge, grant of money or property, financial assistance, or another thing of value given in response to a solicitation. However, the definition excludes certain items, including:
- Bona fide membership dues;
- Government grants or contracts;
- United Way allocations from a registered United Way organization;
- Certain funds received from registered tax-exempt organizations.
This distinction matters. A nonprofit with significant total revenue may not have the same amount of FDACS “annual contributions” for purposes of the audit threshold.
FDACS Audit and Review Thresholds
Florida law establishes the following financial statement requirements for charitable organizations or sponsors subject to FDACS registration:
# Less than $500,000 in Annual Contributions
If the organization has less than $500,000 in annual contributions, a CPA compilation, review, or audit is generally optional for FDACS purposes.
# $500,000 to Less Than $1,000,000 in Annual Contributions
If the organization has at least $500,000 but less than $1,000,000 in annual contributions, the financial statement must be reviewed or audited by an independent CPA.
# $1,000,000 or More in Annual Contributions
If the organization has $1,000,000 or more in annual contributions, the financial statement must be audited by an independent CPA.
What Must Be Included in the Financial Statement
For organizations required to file financial information with FDACS, the financial statement must include, among other items:
- A balance sheet;
- A statement of support, revenue and expenses, and any change in fund balance;
- Information regarding professional fundraising consultants, professional solicitors, commercial co-venturers, and amounts received from them, if applicable;
- A statement of functional expenses, including program service costs, management and general costs, and fundraising costs.
This is one reason accurate nonprofit bookkeeping matters. Organizations should be able to clearly distinguish program, management and general, and fundraising expenses before the filing deadline arrives.
Can Form 990 Be Filed Instead?
In many cases, yes. Instead of submitting the FDACS financial statement form, a charitable organization or sponsor may submit a copy of its IRS Form 990 with all attached schedules, or Form 990-EZ with Schedule O, for the preceding fiscal year.
However, if the organization has $500,000 or more in annual contributions, the Form 990 or Form 990-EZ must be prepared by a CPA or another professional who prepares those forms or schedules in the ordinary course of business.
FDACS’s registration application also notes that Form 990-PF and Form 990-N are not accepted in lieu of the listed financial statement options.
Audit vs. Review: What Is the Difference?
An audit provides a higher level of assurance than a review. Under Florida law, an audit must be prepared by an independent CPA in accordance with generally accepted auditing standards, including Statements on Auditing Standards.
A review provides limited assurance and must be prepared by an independent CPA in accordance with the Statements on Standards for Accounting and Review Services.
For organizations with annual contributions between $500,000 and $1,000,000, FDACS allows either a review or an audit.
For organizations with annual contributions of $1,000,000 or more, an audit is required.
Important Exceptions and Exemptions
Not every nonprofit is subject to the FDACS charitable solicitation registration requirements. Florida law excludes certain organizations from Chapter 496, including:
- Bona fide religious institutions;
- Educational institutions;
- State agencies;
- Other government entities;
- Certain other organizations specifically excluded by law.
Florida law also provides certain registration exemptions, including an exemption for some organizations with less than $50,000 in total contributions during a fiscal year, if fundraising is conducted by volunteers, members, or officers who are not compensated, and no assets or income benefit insiders or paid fundraising parties.
These exemptions should be reviewed carefully. An organization should not assume it is exempt simply because it is small or tax-exempt under Section 501(c)(3).
FDACS Can Still Require More Information
Even if an organization would not otherwise be required to submit an audit or review based on the standard thresholds, FDACS may require an audit or review if it finds discrepancies, irregularities, or inconsistent information in the organization’s financial statement.
Practical Takeaway
For FDACS purposes, the basic rule is:
- Less than $500,000 in annual contributions: no required CPA audit or review under FDACS
- $500,000 to less than $1,000,000 in annual contributions: CPA review or audit required*
- $1,000,000 or more in annual contributions: CPA audit required*
*If submitting financials, if submitting form 990 or 990-EZ then no requirement to submit audit or review. Remember, FDACS could still request it if they so wish.
But this is only the FDACS analysis. Nonprofits should separately review grant agreements, donor requirements, loan covenants, board policies, federal funding requirements, and any other regulatory obligations that may independently require an audit.
Need Help Determining Your FDACS Filing Requirement?
If your organization solicits contributions in Florida, it is important to understand whether you are required to register with FDACS, what financial information must be submitted, and whether your contribution level triggers a CPA review or audit.
Integra CPAs and Advisors helps nonprofit organizations evaluate their financial reporting obligations, prepare for audits and reviews, and improve accounting systems so reporting deadlines do not become year-end surprises.
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