Steward Ingram & Cooper, PLLC has prepared financial statements for Raleigh-area organizations since 2000. Our CPAs, members of the AICPA, NCACPA, and CPAConnect, prepare nonprofit financial statements in accordance with GAAP, so your board, donors, grantors, and lenders can rely on the numbers.
Whether you need a compilation, a review, or an audit, we can help you choose the right level and keep your reporting on schedule. Call (919) 872-0866 or fill out the form below to talk with a CPA about your organization’s financial health.
When Does a Nonprofit Need Financial Statements?
Most nonprofits need financial statements even when the IRS doesn’t require them. Accurate financial statements allow your board to oversee the budget, including assets, liabilities, grants, donations, membership dues, loans, and debt. Donors and grantors often request them, and lenders generally require them before approving credit.
Funding sources can also set the level of service. Federal awards, state grants, and loan agreements may each call for a review or audit. Your Form 990 is a separate filing, but it should agree with your financial statements.
Financial Statements for Nonprofits: Compilation, Review, or Audit?
- Compilation: we organize your financial data into GAAP-format statements. No assurance is provided.
- Review: a CPA performs inquiries and analytical procedures and provides limited assurance.
- Audit: the highest level of assurance, with independent testing of your balances and a look at internal controls. See what a financial statement audit involves.
Grant agreements, lender requirements, and board policy generally decide which one fits. If you are not sure, we can look over your agreements and recommend a level.
What Nonprofit Financial Statements Include
Nonprofit accounting follows its own standards, so your statements will not look like a business’s. A full set generally includes four statements plus notes.
Statement of Financial Position
The nonprofit version of a balance sheet. It lists assets, liabilities, and net assets, with net assets reported as without donor restrictions or with donor restrictions. Board designations are generally shown within net assets without donor restrictions.
Statement of Activities
Similar to an income statement, it reports revenue, expenses, and the change in net assets for the year. When a donor restriction is met, the amount is released and shown as a reclassification here.
Statement of Functional Expenses
Breaks expenses out by type and by function: program services, management and general, and fundraising. Boards and funders often use it to see how much of your spending supports your mission. Some nonprofits present it as a separate statement and others include it in the notes.
Statement of Cash Flows
Shows how cash moved through operating, investing, and financing activities, which can help your board judge liquidity.
Financial Reporting for Restricted Funds and Unrestricted Funds
Nonprofit financial reporting comes down to one question: which dollars can be used for what. Donors and grantors often attach limits to their gifts, and your financial statements need to show those limits clearly. Restricted funds and unrestricted funds are common shorthand for the two classes of net assets your statements report.
| Fund type | How it appears in your statements | Examples |
|---|---|---|
| Unrestricted funds | Net assets without donor restrictions | General operating gifts, program fees, membership dues |
| Restricted funds | Net assets with donor restrictions | A grant for a youth program, a pledge due next year, endowment principal |
Our CPAs can generate financial statements for both unrestricted and restricted funds for easy reference come tax filing time.
Why Raleigh Nonprofits Work With Steward Ingram & Cooper
We have served nonprofits in and around Raleigh since 2000 and prepare every set of statements in accordance with GAAP. Because we also offer bookkeeping services and nonprofit tax planning and preparation, your records, financial statements, and Form 990 can stay consistent from year to year.
We also support local nonprofits through donations and volunteering, including the Raleigh Rescue Mission, the Food Bank of Eastern and Central NC, and Habitat for Humanity. Our team members can take up to one week of paid time off for community service work.
We match each nonprofit with the CPAs who fit its needs. Most of our work is done virtually, with in-person meetings when they help, so you do not need to be near our office to work with us. We work with nonprofits in Chapel Hill, Durham, Morrisville, and the surrounding Triangle area.
Nonprofit Financial Statements FAQs
What are the four basic financial statements for a nonprofit?
A full set generally includes the statement of financial position, the statement of activities, the statement of cash flows, and the statement of functional expenses, along with the notes. Some nonprofits show functional expenses in the notes instead of as a separate statement.
Do nonprofits have a profit and loss statement?
Not by that name. The statement of activities does the same job as a profit and loss statement, but it reports the change in net assets, split between donor restricted and unrestricted, instead of net income.
Does a 501(c)(3) have to show its financials?
Public charities generally must make their Form 990 available for public inspection, and it includes financial information. Audited or reviewed financial statements are generally not required to be public, but donors, grantors, lenders, and some states may ask for them. Requirements vary, so check your grant agreements and state registration rules.
How are not-for-profit financial statements different from a business’s?
Not-for-profit statements report net assets instead of owner’s equity, separate donor-restricted money from unrestricted money, and include an analysis of expenses by function. A business’s statements focus on net income and owners’ equity.
When does a nonprofit need an audit instead of a review?
It generally depends on your funding and agreements rather than a single revenue rule. Spending $1 million or more in federal awards in a fiscal year beginning on or after October 1, 2024 generally triggers a Single Audit. Some grantors, lenders, and state programs also require an audit or allow a review, so check your agreements first and then talk with a CPA.
How much do nonprofit financial statements cost?
Cost depends on the level of service, the size and complexity of your organization, and how organized your records are. Compilations generally cost less than reviews, and reviews less than audits. Give us a call to see if we’re taking on new clients and if so, request a free quote.
What is the difference between Form 990 and financial statements?
Form 990 is the annual information return filed with the IRS. Financial statements are prepared under GAAP and may be compiled, reviewed, or audited, and the two should agree. Form 990 is generally due by the 15th day of the fifth month after your fiscal year ends. See our nonprofit tax deadlines for the full list.
How should board members read nonprofit financial statements?
Start with the statement of financial position for cash and liquidity, then the statement of activities for the change in net assets. Use the statement of functional expenses to compare program spending with administrative costs and fundraising, and the cash flow statement to see timing. We are glad to walk your board through them.