Massachusetts nonprofits are seeing a significant shift in financial reporting requirements thanks to a newly enacted law. Last week, Governor Healey signed into law a $4 billion economic development bill that includes significant changes to the financial statement review and audit thresholds:
- Review threshold: Increased from $200,000 to $500,000.
- Audit threshold: Increased from $500,000 to $1,000,000.
What This Means for MA Nonprofits
These changes provide greater flexibility and reduce financial reporting burdens for MA nonprofits. Specifically:
- Fewer Organizations Will Require an Audit: Nonprofits with gross revenue between $500,000 and $1,000,000 now qualify for a review instead of a full audit, saving time and resources.
- Simplified Compliance for Smaller Nonprofits: With the increased thresholds, smaller organizations (those with revenue under $500,000) are exempt from both reviews and audits, reducing administrative overhead for grassroots nonprofits.
- Immediate Applicability: If your organization’s prior fiscal or calendar year financials have not yet been filed with the Massachusetts Attorney General’s Office, the updated thresholds apply. This includes any filings currently in pending status.
Key Details to Know
- Effective Immediately: Governor Healey signed an emergency preamble, so these updates are already in effect.
- Additional Guidance Available: For more information, refer to the Massachusetts Attorney General’s guidance on audits and reviews.
If you have any questions about how these changes might impact your organization’s reporting requirements, please don’t hesitate to reach out to your LGA Advisor.
