The Commonwealth of Massachusetts has recently implemented significant changes to its financial reporting requirements for nonprofit organizations, marking an important shift that affects hundreds of organizations across the state. These changes reflect a more nuanced approach to financial oversight that better aligns with today’s economic realities.
Under previous regulations, nonprofits with annual gross support and revenue exceeding $200,000 were required to submit CPA-reviewed or audited financial statements. The new threshold has been raised to $500,000, providing welcome relief to many small and medium-sized organizations. This adjustment acknowledges that smaller nonprofits often operate with limited resources and helps them allocate more funds toward their charitable missions rather than compliance costs.
The regulations now create a two-tier system based on organizational size. Nonprofits with gross support and revenue between $500,000 and $1,000,000 may submit CPA-reviewed financial statements, while organizations exceeding $1,000,000 must provide fully audited statements. This represents a substantial increase from the previous $500,000 threshold for required audits.
Nonprofit leaders should carefully evaluate their projected annual revenue to determine which requirement applies to their organization. While some organizations may no longer need an audit, maintaining rigorous financial controls and transparency remains crucial for donor confidence and organizational success.
Gray, Gray & Gray helps nonprofits navigate these regulatory requirements while maintaining the highest standards of financial accountability. You can contact us for guidance on implementing these new requirements by calling 781.407.0300.
Michael Cecere, CPA, MST is a Gray, Gray & Gray partner and chair of the firm’s Non Profit Practice Group. He can be contacted by telephone at (781) 407-0300 or via email at: mcecere@gggllp.com.