OUR THOUGHTS ON:

Potential Audit Relief for Charitable Organizations Soliciting in Pennsylvania

Audit|Not-for-Profit|Tax

By Sarah Piot

Charitable organizations soliciting contributions in the state of Pennsylvania could see changes coming to the thresholds for audit requirements.

In September, the Senate Committee approved House Bill 1420, which sets new auditing thresholds of financial statements under the Pennsylvania Solicitation of Funds for Charitable Purposes Act. Current rules require specific types of financial statements dependent on the amount of national charitable contributions received annually, as follows:

  • Audit - $300,000 or more in national charitable contributions
  • Review - $100,000 to less than $300,000 in national charitable contributions
  • Compilation - $50,000 to less than $100,000 in national charitable contributions

The thresholds above were last updated in 2006. Under HB 1420, thresholds would increase as follows:

  • Audit - $750,000 or more in national charitable contributions
  • Review - $250,000 to less than $750,000 in national charitable contributions
  • Compilation - $100,000 to less than $250,000 in national charitable contributions

The new bill aims to align the audit requirements for financial reports with federal law.

In addition, the Senate Committee also approved House Bill 1421, which clarifies when an organization’s annual registration statement is considered timely filed. Under current law, the annual registration statement must be received by the Pennsylvania Bureau of Charitable Organizations by the renewal date in order for it to be considered on time. Under the new bill, the statement would be considered on time if it is postmarked on or before the renewal date. The goal of this bill is to align the due date standard with nearly all other state filings and to save nonprofit organizations from incurring unnecessary fines and penalties.

Both House Bill 1420 and 1421 are pending before the full Senate. Schneider Downs will follow the potential changes and post an update once more information is available.

If you have questions about the potential changes, please contact us.  For more articles, please visit the Our Thoughts On...blog.  

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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