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Reaching $1 million in annual charitable contributions is an important milestone for many Arkansas nonprofits. It often reflects years of organizational growth, expanded fundraising efforts, and increased public trust. It also brings additional financial reporting responsibilities under Arkansas law.

The Arkansas Charitable Solicitation Act requires certain charitable organizations to provide independently audited financial statements as part of their annual registration with the Arkansas Secretary of State. While smaller organizations may satisfy the state’s reporting requirements with a financial review, organizations receiving more than $1 million in annual contributions generally must obtain a full financial statement audit performed by an independent Certified Public Accountant (CPA). (Ark. Code § 4-28-403; Arkansas Secretary of State, Form CR-03)

For nonprofit leaders, preparing for an audit is about more than regulatory compliance. An independent audit can strengthen internal controls, improve governance, increase donor confidence, and satisfy grantor or lender requirements.

Whether your organization operates in Little Rock, Fayetteville, Fort Smith, Jonesboro, Bentonville, or elsewhere in Arkansas, understanding these requirements early can make the annual filing process significantly smoother.

Arkansas Audit Requirements at a Glance

Quick Answer

If your charitable organization receives more than $1 million in annual contributions, Arkansas generally requires audited financial statements prepared by an independent CPA to accompany your annual charitable registration filing. Organizations below this threshold may qualify to submit reviewed financial statements instead. (Ark. Code § 4-28-403; Arkansas Secretary of State, Form CR-03)

When Does Arkansas Require an Audit?

Arkansas determines its financial reporting requirements using the amount of charitable contributions an organization receives during its fiscal year—not total revenue or assets. (Ark. Code § 4-28-403)

The state uses a tiered reporting system:

For organizations approaching the $1 million threshold, it’s often beneficial to begin audit planning several months before year-end. Early planning allows management to address accounting issues, prepare schedules, and avoid delays in filing the annual charitable registration.

Why Arkansas Requires Audited Financial Statements

Arkansas increases its reporting requirements as charitable organizations grow because larger nonprofits generally receive greater public support and manage larger amounts of donated funds.

An independent audit provides the Arkansas Secretary of State, donors, grantmakers, and governing boards with a higher level of assurance that the organization’s financial statements are fairly presented in accordance with Generally Accepted Accounting Principles (GAAP). (AICPA, Statements on Auditing Standards)

Unlike a review engagement, an audit includes:

• Risk assessment procedures
• Testing of financial transactions
• Evaluation of internal controls
• Confirmation of selected balances
• Examination of supporting documentation
• An independent audit opinion

These procedures provide reasonable assurance regarding whether the financial statements are free from material misstatement. (AICPA, Statements on Auditing Standards).

Arkansas Law at a Glance

One aspect of Arkansas’s charitable solicitation law is its straightforward contribution-based reporting structure. Rather than using total revenue, public support, or complex calculations, the statute focuses on annual charitable contributions received by the organization. (Ark. Code § 4-28-403)

Annual registration and financial reporting are administered by the Arkansas Secretary of State’s Business and Commercial Services Division. Organizations that solicit charitable contributions in Arkansas should evaluate their contribution totals each fiscal year to determine whether they must submit reviewed or audited financial statements with their annual report. (Arkansas Secretary of State, Charitable Entities; Form CR-03)

Because contribution levels can change significantly from year to year—especially after major fundraising campaigns or capital campaigns—many nonprofits unexpectedly cross the audit threshold. Monitoring contributions throughout the year can help organizations prepare well before their filing deadline.

Common Situations That Push Arkansas Nonprofits Over the Audit Threshold

Many organizations don’t gradually cross the $1 million threshold—they exceed it because of one significant event.

Common examples include:

• Successful capital campaigns
• Major donor gifts
• Large foundation grants
• Disaster relief fundraising
• Special fundraising events
• End-of-year giving campaigns

Organizations anticipating one of these events should speak with their CPA early in the fiscal year so accounting records and supporting documentation are maintained with the audit in mind.

Preparing for an Arkansas Nonprofit Audit

An Arkansas nonprofit audit typically begins long before fieldwork starts.

Your CPA will often request:

• General ledger
• Trial balance
• Bank reconciliations
• Investment statements
• Contribution schedules
• Grant agreements
• Board minutes
• Fixed asset schedules
• Debt agreements
• Internal control documentation
• IRS Form 990
• Prior-year financial statements

Organizations that maintain complete accounting records throughout the year generally experience shorter audit timelines and fewer follow-up requests.

Beyond Compliance: Why an Audit Can Benefit Your Nonprofit

Although Arkansas law requires audits once contributions exceed the statutory threshold, many organizations discover that the audit itself provides long-term value. (Ark. Code § 4-28-403)

An annual audit can help:

• Increase donor confidence
• Improve board oversight
• Strengthen internal controls
• Identify accounting process improvements
• Support future grant applications
• Demonstrate financial accountability
• Build credibility with lenders and regulators

For growing nonprofits, these benefits often extend well beyond satisfying state filing requirements.

Why Choose ELT CPA LLC?

ELT CPA LLC provides independent nonprofit financial statement audits for charitable organizations throughout Arkansas.

Our professionals understand nonprofit accounting standards, charitable reporting requirements, and the practical challenges organizations face as they grow. We work collaboratively with nonprofit leadership to complete efficient, well-planned audit engagements while minimizing disruption to daily operations.

Whether your organization is preparing for its first required audit or has undergone audits for years, our team can help you navigate Arkansas’s reporting requirements with confidence.

Frequently Asked Questions

Does Arkansas use revenue or contributions?

Arkansas bases its audit threshold on annual charitable contributions, not total organizational revenue. (Ark. Code § 4-28-403).

What happens if we exceed $1 million because of one large donation?

If your annual contributions exceed the statutory threshold during the fiscal year, Arkansas generally requires audited financial statements for that reporting period, even if the increase resulted from a single significant contribution. (Ark. Code § 4-28-403; Arkansas Secretary of State, Form CR-03)

Who receives the audited financial statements?

Audited financial statements are generally submitted with the organization’s annual financial report to the Arkansas Secretary of State. (Arkansas Secretary of State, Form CR-03).

Should we wait until year-end to hire an auditor?

No. Most nonprofits benefit from engaging their CPA several months before fiscal year-end, particularly if this will be the organization’s first audit.