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Board considers raising nonprofit audit threshold from $50,000 to $400,000
Summary
Staff proposed raising the external-audit threshold from $50,000 to $400,000, citing rising audit costs and alignment with state requirements; staff said organizations would submit internal financial statements for staff review and the board will vote on the policy at the next meeting.
Staff presented a proposed change to the board’s financial-audit policy that would raise the threshold requiring an external financial audit from organizations receiving $50,000 or more per year to $400,000.
Melanie, finance staff, said the change responds to rising audit costs and the burden audits place on smaller providers. “We have been requiring anybody receiving $50,000 or more a year from us get a full financial audit,” she said, adding auditors’ quotes for one agency ranged from $7,000 to $22,000.
The proposal would require organizations that already obtain external audits to submit them; others would submit internal financial statements (balance sheet, trial balance and supporting schedules) for staff review. Melanie told the board staff would still examine source documents and could perform follow-up audits or request additional documentation if the review raised concerns.
Board members pressed for detail on how many agencies would be affected and on authorities. In response to a question about scale, Melanie said the change would probably remove the audit burden for “maybe half of our agencies,” noting many smaller grantees currently exceed the $50,000 mark and that state funding typically requires audits only at higher thresholds. The staff presentation included the rationale that state funding rules commonly set a $400,000 audit threshold.
Several members asked for confirmation that the board or staff could still initiate an audit for any grantee if needed. Melanie said that authority would remain: “We would still be able to go in at any level,” she said, and staff would follow up when records raised questions.
Next steps: staff said the policy edits are being discussed at the committee level and will be moved to the board meeting next week for a formal vote (no votes were taken at the discussion meeting). The change would reduce the immediate cost burden on smaller providers while preserving staff oversight and the ability to require an audit when concerns are identified.
Ending: The board asked staff to add clarifying language about when staff would escalate to a formal audit and to note any interactions with state audit statutes, then return the revised policy for action at the next meeting.
