Pennsylvania Eases Compliance Requirements for Nonprofits

For many small to medium-sized nonprofits registered in Pennsylvania, the requirement that a CPA provide assurance on their financial statements has been a substantial expense, money better used for their charitable missions. House Bill 1420 has amended the Solicitation of Funds for Charitable Purposes Act to increase the thresholds used to determine when, and to what extent, CPA assurance is required for the annual financial statements of charitable organizations registered with the State.

The Act continues the requirement for either internally-prepared, compiled, reviewed or audited financial statements. However the contribution ranges for which these various levels of assurance are necessary have been increased, as illustrated in the table below:

Nonprofit Tax Chart

The definition of "gross annual contributions" remains unchanged as "total national contributions from all sources based on the organization’s immediate preceding fiscal year end."

The new thresholds apply to all charitable registration renewals due February 15, 2018 or later (for March 31, 2017, fiscal year ends or later) and to all new charitable organization registrations filed on or after February 20, 2018. The Act should reduce compliance costs for smaller organizations and more closely aligns Pennsylvania’s requirements with those of the current Federal Uniform Guidance.

If you have questions or would like to discuss the impact of this change on your organization, contact Sean Kocan or your trusted HBK team member.

About the Author(s)

Sean is a Principal in the Pittsburgh, Pennsylvania office of HBK CPAs & Consultants and has been a Certified Public Accountant since 2004.  He joined HBK in 2011. Prior to joining HBK, Sean was a manager at Deloitte and at another regional accounting firm in Pittsburgh.

Sean has experience performing and supervising assurance services for clients of various types including publicly-traded companies, privately owned businesses, international businesses, development stage entities, governments and not-for-profits. The main industries he serves include charter and approved private schools, religious organizations, residential and community-based not-for-profits, oil and gas producers, software developers, manufacturers and distributors, construction contractors, architectural/engineering (A/E) firms and service organizations.

Sean has extensive experience with internal controls based on his broad experience and fraud examination background. He consults all of his clients on proper internal controls and has helped numerous clients identify and remedy control deficiencies in a practical and useful manner. In addition to traditional audit, review and compilation services, Sean is a firm leader in providing specialized assurance services relating to service organization controls (SOC) reports, Federal Acquisition Regulation (FAR) overhead rate audits, asset-based lending agreed-upon procedures and custody examinations for registered investment advisors. Sean is also a member of the firm’s Assurance Practice Committee.

Sean completed the PICPA 2014-2015 Next Generation Leadership Program and was the recipient of the 2015 PICPA Young Leader Award.

Hill, Barth & King LLC has prepared this material for informational purposes only. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.

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