Jan 24 Audit Threshold Raised for NJ Non-Profits
On January 18, 2022, Governor Murphy signed legislation that would change the audit threshold for New Jersey not-for-profit organizations. The previous “Charitable Registration and Investigation Act” required organizations with gross revenue in excess of $500,000 to submit a financial statement that was audited by an independent certified public accountant along with their annual registration filing. Under the new legislation passed, organizations with monetary donations in excess of $1,000,000 are required to submit an audited financial statement annually. Monetary donations are calculated excluding in-kind donations directly related to the charitable organization’s mission. In-kind donations would include food for food pantries or food shelters, supplies for shelters, and any other in-kind contributions the Attorney General permits.
Not-for-profit organizations who receive less than $1,000,000 in monetary donations would no longer need to incur the costs for a financial statement audit by an independent certified public accountant, which is excellent news for those organizations still trying to navigate through the pandemic. Organizations that receive more than $25,000 but less than $1,000,000 would be required to file a financial report that is certified by the organization’s president or other authorized officer.
Regardless of the change to the audit threshold for New Jersey not-for-profits, organizations may still need an audit to comply with other financing, contractual, or other regulatory requirements. Organizations may still want to consider an audit or a review to demonstrate transparency and accountability.