Make available to all, on request, complete annual financial statements prepared in accordance with generally accepted accounting principles. When total annual gross income exceeds $250,000, these statements should be audited in accordance with generally accepted auditing standards. For charities whose annual gross income is less than $250,000, a review by a certified public accountant is sufficient to meet this standard. For charities whose annual gross income is less than $100,000, an internally produced, complete financial statement is sufficient to meet this standard.
Information Needed from Charity to Determine Compliance:
The charity provides its most recent financial statements.
The Alliance reviews the financial information provided, using the following criteria. The standard's reference to "complete" financial statements refers to the expectation that the charity will provide all pages of the financial statements including schedules and notes, and that the statements will contain all the information called for by generally accepted accounting principles.
- If the charity's annual gross income exceeds $250,000, the financial statements should be audited by an outside certified public accountant (CPA), and the auditor's opinion or cover letter should generally carry a "clean" or "unqualified" opinion indicating that the financial statements were prepared in accordance with generally accepted accounting principles (GAAP).
- If the charity's annual gross income exceeds $100,000 but is less than $250,000, the financial statements may be reviewed by a certified public accountant. A review is a financial statement that provides some level of assurance, but does not involve an examination that is in accordance with generally accepted auditing standards (GAAS). A review will usually include the same elements (e.g., statement of financial position, statement of activities, statement of cash flows, notes, etc.) as the audited financial statements.
- If the charity's gross income is less than $100,000, the financial statements may be internally produced. However, the statement should include a balance sheet, statement of support, revenue and expenses, notes, and any other appropriate schedules.
- If the charity has gross income of less than $100,000 and does not have an internally produced financial statement other than an IRS Form 990 or IRS Form 990-EZ, then providing either of these IRS Forms is sufficient to meet this standard
- If the charity's financial statements involve a joint cost allocation (see Standard 13), the notes to the financial statements should disclose, as required by GAAP, (i) the total amount of the joint cost activity, and (ii) the portion of this cost that was allocated to program service, fund raising expense, and if applicable, administrative expense categories.