Church & Religious Organization Financial Audit Services — DC, Maryland & Virginia

Churches are not legally required to have annual audits unless: (1) they receive federal grants exceeding $1,000,000 (triggering a Single Audit); (2) their denomination requires it; or (3) they've made a specific commitment to major donors or a lender. However, an independent audit provides critical protection against fraud, builds donor confidence, and is increasingly expected by major individual donors and foundations before making significant gifts.

A church financial audit examines: all income accounts (tithes, offerings, designated gifts, rental income, fundraising); all expense accounts; restricted fund balances and transactions; bank account reconciliations; payroll and compensation records; building fund and capital campaign transactions; and internal controls over financial reporting. We issue an audit opinion on the financial statements and a management letter on internal controls.

Fees depend on the size of the congregation (annual budget), the number of bank accounts, the complexity of restricted funds, whether a Single Audit is required, and the quality of your records. We are transparent and charge fair fees quoted upfront after a short call.

Most churches are exempt from the Form 990 filing requirement under IRC Section 6033(a)(3)(A). However, this exemption applies specifically to churches and integrated auxiliaries — other religious organizations (schools, hospitals, missions agencies, religious foundations) often must file Form 990 or 990-EZ. If your organization is not a congregation itself, you may need to file. We can review your tax status and advise accordingly.

Common church audit findings include: (1) inadequate offering count procedures (only one person counting); (2) checks signed by the same person who approves expenses; (3) no formal authorization process for large expenditures; (4) undocumented benevolence payments; (5) pastor's compensation not properly approved by an independent board; (6) co-mingling of operating and building fund accounts; and (7) missing documentation for designated gift restrictions.

For your first church audit: (1) gather complete bank statements for all accounts for the full fiscal year; (2) reconcile all bank accounts as of year-end; (3) prepare or request a trial balance from your accounting software; (4) compile all restricted fund documentation — donor letters, grant agreements; (5) gather board meeting minutes documenting major financial decisions; and (6) organize payroll records and pastor compensation documentation. We provide a complete document request list when you engage us.

An audit provides reasonable assurance and an audit opinion — the CPA tests transactions, verifies balances, and expresses a formal opinion. A review provides limited assurance — the CPA performs analytical procedures and inquiries but does not test individual transactions. Audits cost more but provide greater credibility. Major donors and denominational bodies requiring formal assurance typically specify an audit; smaller denominational reporting requirements sometimes accept a review.

Many major donors and foundations now require audited financial statements before making gifts of $100,000 or more. Without audited financials, your congregation may be missing opportunities with major individual donors, community foundations, and grant-making organizations. Additionally, some state charitable solicitation registrations require audited financials for organizations above certain revenue thresholds.