What documents does a nonprofit need for an annual audit?

A nonprofit audit typically requires 36 items across 7 categories: financial statements (balance sheet, income statement, cash flows), bank reconciliations, board minutes and governance records, grant documentation, Form 990 draft, internal controls documentation (accounting policies, dual-signature policy), and prior year audit findings with remediation status.

How long does it take to prepare for a nonprofit audit?

Most nonprofits spend 2–4 weeks gathering audit documents if they start from scratch. Organizations that maintain a living audit prep checklist throughout the year typically need only 1–2 hours of final review before the auditor arrives.

Which nonprofits are required to have an annual audit?

Requirements vary by state and federal funding. US 501(c)(3) nonprofits receiving $750,000 or more in federal awards must complete a Single Audit. Many states have lower thresholds — some require audits at $300,000 or even $100,000 in annual revenue. Check your state's specific threshold and any requirements from your major funders.

What is a PBC list in a nonprofit audit?

PBC stands for 'Prepared by Client.' A PBC list is the set of documents and schedules your CPA requests before fieldwork begins. It typically includes financial statements, bank reconciliations, board minutes, grant agreements, Form 990 drafts, and internal control documentation. Completing your PBC list on time is the single biggest factor in keeping audit costs down.

What happens if a nonprofit is not prepared for an audit?

Poor audit preparation leads to extended fieldwork, higher CPA fees, delayed audit completion, and potential audit findings or management letter comments. Repeat findings across multiple years can damage credibility with funders and board members. In some cases, delayed audits can trigger compliance issues with state regulators or federal grantors.

What is a nonprofit audit checklist?

A nonprofit audit checklist is a categorized list of every document your CPA will request during an annual financial statement audit. AuditEase's free checklist covers 36 items across 7 categories: financial statements, bank reconciliations, board and governance records, grant documentation, Form 990, internal controls, and prior year findings. It can be used year-round to stay audit-ready.

Free Nonprofit Audit Checklist (2026) — 36 Items

Financial Statements

0 / 5

Statement of Financial Position (Balance Sheet) — current year
Statement of Activities (Income Statement) — current year
Statement of Cash Flows
Functional expense allocation schedule (program vs. G&A vs. fundraising)
Prior year comparative financials for auditor reference

Bank Reconciliations

0 / 5

All operating bank accounts reconciled through fiscal year-end
Investment / money market account statements (12 months)
Petty cash count and reconciliation
Outstanding checks list as of year-end
Bank confirmation letters sent to all financial institutions

Board Minutes & Governance

0 / 5

Signed minutes for all board meetings during fiscal year
Finance/audit committee minutes (if applicable)
Signed conflict of interest disclosures — all board members
Board-approved operating budget for the audit year
Board resolution authorizing the audit engagement

Grant Documentation

0 / 6

All active grant agreements with award amounts and restrictions noted
Restricted vs. unrestricted revenue tracking by grant source
Funder reports submitted and filed (progress + financial)
Federal expenditures schedule — Single Audit threshold check ($750K)
Grant closeout correspondence and final payment documentation
Fiscal sponsorship MOUs on file — operator, fund flow, and use of funds documented

990 Preparation

0 / 5

Draft Form 990 (or 990-EZ) prepared and under review
Schedule A — public support calculation documented
Schedule B — list of substantial contributors (if applicable)
Key employee and officer compensation — W-2s and 1099s reconciled
Program service accomplishments narrative — current year activities

Internal Controls

0 / 5

Written accounting policies and procedures manual — current version
Dual-signature / dual-authorization policy for disbursements
Expense authorization matrix — who can approve at what threshold
Credit card policy and monthly statement reviews on file
Payroll register reviewed and approved by a non-payroll employee

Prior Year Findings

0 / 5

Prior year management letter — reviewed and filed
Written remediation plan for each prior year finding
Current status documented for every finding (resolved / in progress / open)
Evidence of corrective action for resolved findings
Auditor communication log — questions, requests, responses tracked

2026 Nonprofit Audit Checklist

Financial Statements

Bank Reconciliations

Board Minutes & Governance

Grant Documentation

990 Preparation

Internal Controls

Prior Year Findings