What are nonprofit audited financial statements?
Audited financial statements are a nonprofit's year-end statements together with an independent CPA's report giving an opinion on whether they are fairly presented. Form 990 asks whether the statements were audited: 18,518 of 20,193 filings we parsed (91.7%) answered yes (IRS e-file, data as of 2026-09-20).
Last verified: 2026-09-20 · Every figure links its source.
What is an audited financial statement for a nonprofit?
It is a package, not a single document: the statements themselves, the notes, and the independent auditor's report that carries the opinion. Under the not-for-profit reporting standard the statements are a statement of financial position, a statement of activities, a statement of functional expenses and a statement of cash flows, with net assets split into those with donor restrictions and those without (FASB ASC 958).
| Part | What it shows |
|---|---|
| Independent auditor's report | The opinion, the scope and the auditor's responsibilities |
| Statement of financial position | Assets, liabilities and net assets at year end |
| Statement of activities | Revenue, expenses and the change in net assets |
| Statement of functional expenses | Expenses by program, management and general, and fundraising |
| Statement of cash flows | Where the cash came from and went |
| Notes | Accounting policies, restrictions, commitments, subsequent events |
Source: FASB Accounting Standards Codification · Last verified: 2026-09-20
Are audited financial statements required for nonprofits?
The IRS does not require an audit to keep tax-exempt status. Three other things do, and any one of them is enough:
- Federal awards. Expending $1,000,000 or more in federal awards in your fiscal year triggers a single audit, which includes the financial statement audit (2 CFR 200.501).
- State charity law. Many states set a revenue or contribution threshold — see nonprofit audit requirements by state.
- A funder, lender or your own bylaws. Grant agreements and loan covenants commonly require audited statements below any legal threshold.
Source: 2 CFR 200.501 · IRS, About Form 990 · Last verified: 2026-09-20
How do you read a nonprofit audit opinion?
Read the opinion paragraph first and find the one word that matters.
| Opinion | What it means |
|---|---|
| Unmodified | The statements are fairly presented in all material respects |
| Qualified | Fairly presented except for one identified matter |
| Adverse | The statements are not fairly presented |
| Disclaimer | The auditor could not obtain enough evidence to give an opinion |
In a single audit there is more than one opinion: on the financial statements, an in-relation-to opinion on the schedule of expenditures of federal awards, and an opinion on compliance for each major program (2 CFR 200.515). A clean financial opinion with a modified compliance opinion is common, and the schedule of findings and questioned costs is where the detail sits.
Source: 2 CFR 200.515 · Last verified: 2026-09-20
Where can I find a nonprofit's audited financial statements?
If the organization filed a single audit, the whole reporting package is public in the Federal Audit Clearinghouse (search by name, EIN or UEI). If it did not, there is no federal repository: check the organization's own site, your state charity registry, and Form 990, which states whether the statements were audited. Our guide to finding audited financials walks through each route.
Source: Federal Audit Clearinghouse · FAC search · IRS, public disclosure of exempt organization returns · Last verified: 2026-09-20
How long should a nonprofit keep audited financial statements?
For federal awards the rule is three years from the date the final financial report is submitted, with exceptions that extend it — litigation or an unresolved audit finding, a written extension from the agency, and property records, which run three years after final disposition (2 CFR 200.334). Most organizations keep the audited statements themselves permanently; the reasoning is in how long to keep nonprofit audit reports.
Source: 2 CFR 200.334 · Last verified: 2026-09-20
Questions and answers
What is an audited financial statement nonprofit boards should expect?
The year-end statements, the notes and the independent auditor's report containing the opinion. In a single audit the package also contains the schedule of expenditures of federal awards, the schedule of findings and questioned costs and the corrective action plan.
Do nonprofits need audited financial statements?
Not because of the IRS. An audit becomes mandatory when federal awards expended reach the single audit threshold, when state charity law requires one, or when a funder, lender or your own bylaws require one.
Are audited financial statements required for nonprofits in every state?
No. State requirements differ and are usually tied to gross revenue or to contributions received. The verified thresholds we publish are on the nonprofit audit requirements page.
When must a nonprofit get an audited financial statement?
When it expends $1,000,000 or more in federal awards in its fiscal year, when its state charity law threshold is met, or when a grant agreement or loan covenant requires one.
When nonprofit financials need to be audited, who signs the report?
The independent CPA firm signs the auditor's report. Management remains responsible for the statements themselves, and in a single audit management also signs the corrective action plan.
How to read nonprofit audited financial statements?
Start with the opinion, then the statement of activities for the change in net assets, then the notes on donor restrictions, then the functional expense statement. In a single audit, read the schedule of findings and questioned costs before anything else.
How long does a nonprofit keep audited financial statements?
Federal award records must be kept three years from submission of the final financial report, with exceptions for litigation, unresolved findings, written extensions and property records.
Do Maryland nonprofits have to submit audited financial statements?
State registration rules differ and we only publish thresholds we have verified against the statute. Maryland is not yet verified in our data, so check the Maryland charity registration requirements directly before relying on any figure.
Need an auditor for this year? Find firms that audit nonprofits.
This is public-record information, not accounting or legal advice.