Did you know that there are three different types of financial reviews? Here is are the financial review options:
- Compilation – High level review of financial documents (no testing occurs during this process)
- Review – Review of financial statements to assure your organization is representing its financials correctly (some testing occurs during this process)
- Audit – Much more thorough review process that also includes a review of internal controls, testing of transactions, proof of financial documentation, etc.
However, if over $750K in federal funds have been expended, or if your state requires an audit, then you do not have the option for a Compilation or Financial Review. Here’s a basic article on the difference between a Compilation and a Review. – https://www.councilofnonprofits.org/nonprofit-audit-guide/what-is-a-review
Most organizations with income lower than $500K have an annual Review by an independent source. Once their revenue exceeds this amount, you might consider having a financial audit every other year until revenue dictates having an annual audit.
Here’s a helpful site regarding state audit requirements – https://www.councilofnonprofits.org/nonprofit-audit-guide/state-law-audit-requirements#TX