March 23, 2024
Wisconsin’s AB 912 Eases Financial Reporting for Nonprofits
Signed into law on March 21, 2024, as 2023 Wisconsin Act 151, and effective for fiscal years beginning on or after March 23, 2024, Assembly Bill 912 raises financial reporting thresholds for charitable organizations under Wisconsin Statutes § 202.12.
The audit threshold for submitting CPA-prepared financial statements increases from $500,000 to $1,000,000 in annual contributions, while the review threshold rises from $300,000 to $500,000. Nonprofits with contributions between $500,000 and $1,000,000 now require only a reviewed statement, and those between $300,000 and $500,000 are exempt from reviews, reducing compliance costs.
Waiver criteria for audits and reviews are also adjusted, easing requirements for organizations with significant one-time contributions.
Key Provisions of Wisconsin AB 912
Increase in Audit Threshold:
- Previous Requirement: Charitable organizations with annual contributions exceeding $500,000 were required to submit an audited financial statement prepared by an independent certified public accountant (CPA) in accordance with generally accepted accounting principles (GAAP).
- New Requirement: The audit threshold is raised to $1,000,000 in annual contributions. Organizations with contributions exceeding $1,000,000 must file an audited financial statement within 12 months of their fiscal year-end.
- Impact: Nonprofits with contributions between $500,000 and $1,000,000 are no longer required to submit audited financial statements, reducing compliance costs.
Increase in Review Threshold:
- Previous Requirement: Organizations with annual contributions between $300,000 and $500,000 were required to submit a reviewed financial statement by an independent CPA, also in accordance with GAAP.
- New Requirement: The review threshold is increased to $500,000. Nonprofits with contributions between $500,000 and $1,000,000 must now submit a reviewed financial statement within 12 months of their fiscal year-end.
- Impact: Organizations with contributions between $300,000 and $500,000 are exempt from the review requirement, further lowering compliance burdens.
Adjustments to Waiver Criteria:
- Audit Waiver:
- Previous Criteria: Organizations with contributions exceeding $500,000 could request a waiver from the audit requirement if they received one or more contributions from a single contributor exceeding $400,000 and had less than $100,000 in contributions in each of the prior three years.
- New Criteria: The waiver applies to organizations with contributions exceeding $1,000,000 if they received one or more contributions from a single contributor exceeding $700,000 and had less than $300,000 in contributions in each of the prior three years.
- Review Waiver:
- Previous Criteria: Organizations with contributions between $300,000 and $500,000 could request a waiver if they received one or more contributions from a single contributor exceeding $200,000 and had less than $100,000 in contributions in each of the prior three years.
- New Criteria: The waiver applies to organizations with contributions between $500,000 and $1,000,000 if they received one or more contributions from a single contributor exceeding $300,000 and had less than $300,000 in contributions in each of the prior three years.
- Impact: The updated waiver criteria make it easier for organizations receiving large one-time contributions to avoid costly audits or reviews, provided they meet the historical contribution limits.
Definition of Contributions:
- The legislation maintains the existing definition of “contributions” as grants, pledges, or donations of money, property, or other items of value, excluding government grants, food, used clothing, or household goods. This definition is unchanged but remains critical for determining applicability of the thresholds.
Filing Requirements:
- Nonprofits must continue to file an Annual Financial Report (Form 1952) with the DFI within 12 months of their fiscal year-end, regardless of the new thresholds.
- Organizations with contributions of $25,000 or less (or less than $50,000 if soliciting only in their county) may be exempt from registration but must comply with financial reporting if registered.