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As Michigan nonprofits grow through increased fundraising and expanded community programs, state law requires larger charitable organizations to provide additional financial transparency. For many nonprofits, this means obtaining independently audited financial statements prepared by a Certified Public Accountant (CPA).

Under Michigan’s current renewal requirements, charitable organizations with $575,000 or more in qualifying contributions and fundraising generally must submit audited financial statements prepared by an independent CPA. The Michigan Attorney General’s CTS-02 Renewal Solicitation Form calculates the threshold using contributions and net income from special fundraising events and gaming activities, less governmental grants. (Michigan Attorney General, CTS-02 Renewal Solicitation Form)

Michigan does not use total organizational revenue as the audit-threshold measure. The current CTS-02 schedule begins with contributions reported on the organization’s IRS return, adds net income from special fundraising events and gaming activities, and subtracts governmental grants before applying the review and audit thresholds. Organizations approaching the threshold should monitor these amounts throughout the fiscal year. (Michigan Attorney General, CTS-02 Renewal Solicitation Form)

Whether your nonprofit serves Detroit, Grand Rapids, Lansing, Ann Arbor, Traverse City, Flint, Kalamazoo, or communities throughout Michigan, understanding these requirements early can simplify compliance and strengthen financial governance.

Michigan Audit Requirements at a Glance

Quick Answer

If your Michigan charitable organization has $575,000 or more in the qualifying contribution-and-fundraising amount calculated on the CTS-02 renewal schedule, Michigan requires audited financial statements prepared by an independent CPA. If that amount is greater than $325,000 but less than $575,000, reviewed or audited financial statements are required. (Michigan Attorney General, CTS-02 Renewal Solicitation Form)

When Does Michigan Require a Nonprofit Audit?

Michigan’s current renewal form determines the CPA reporting requirement using a contribution-and-fundraising calculation rather than total organizational revenue. The calculation starts with contributions, adds net income from special fundraising events and gaming activities, and subtracts governmental grants. (Michigan Attorney General, CTS-02 Renewal Solicitation Form)

Organizations generally follow this reporting structure:

Because Michigan uses a graduated reporting system, organizations can often anticipate when they are moving from no CPA-level reporting to a review and then to a full audit. Under the current CTS-02 form, an amount greater than $325,000 but less than $575,000 requires reviewed or audited financial statements, while $575,000 or more requires an audit. (Michigan Attorney General, CTS-02 Renewal Solicitation Form)

How Michigan Measures the Audit Threshold

Michigan’s reporting threshold is tied to the contribution-and-fundraising calculation on the Attorney General’s renewal form, rather than to total revenue or assets. This distinction matters for nonprofits with substantial program-service, investment, rental, or other operating income. (Michigan Attorney General, CTS-02 Renewal Solicitation Form)

Many nonprofits also receive income from:

• Program service fees
• Membership dues
• Investment income
• Rental income
• Other operating activities

These revenue sources may be important to an organization’s operations, but they do not by themselves determine whether the current CPA review or audit threshold has been reached. Nonprofits should instead track the specific amounts used on the CTS-02 calculation and retain clear supporting records throughout the year. (Michigan Attorney General, CTS-02 Renewal Solicitation Form)

Organizations with multiple funding sources often benefit from reviewing contribution totals with their CPA before preparing their annual registration.

Michigan Law at a Glance

The Michigan Attorney General’s Charitable Trust Section oversees charitable solicitation registration and related financial reporting requirements for organizations that solicit or receive contributions in Michigan. Michigan’s Charitable Organizations and Solicitations Act provides the statutory framework for registration. (MCL 400.271 et seq.; Michigan Attorney General, Charitable Organizations)

Michigan’s current renewal requirements increase the level of CPA involvement as the qualifying contribution-and-fundraising amount grows. Amounts greater than $325,000 but less than $575,000 require reviewed or audited financial statements, while amounts of $575,000 or more require audited financial statements prepared by an independent CPA. (Michigan Attorney General, CTS-02 Renewal Solicitation Form)

Because fundraising results can fluctuate significantly from one year to the next, nonprofits should evaluate their contribution totals annually instead of assuming prior-year reporting requirements will continue to apply.

Preparing for a Michigan Nonprofit Audit

Organizations approaching Michigan’s audit threshold should begin planning several months before fiscal year-end.

Your CPA will typically request:

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

Maintaining complete accounting records throughout the year can reduce audit delays and simplify the annual registration process.

Common Reasons Michigan Nonprofits Reach the Audit Threshold

Many Michigan organizations become subject to an audit after a particularly successful fundraising year.

Common examples include:

• Capital campaigns
• Major individual donations
• Community fundraising initiatives
• Corporate giving programs
• Foundation grants
• Year-end fundraising campaigns

Reviewing projected contribution totals before the close of the fiscal year helps nonprofit leaders prepare for both audit planning and annual reporting requirements.

Benefits Beyond Compliance

Although Michigan’s renewal requirements call for audited financial statements once the current threshold is met, an audit can also provide organizational benefits beyond regulatory compliance. Audits of nonissuer financial statements are performed under applicable AICPA Statements on Auditing Standards. (Michigan Attorney General, CTS-02 Renewal Solicitation Form; AICPA, Statements on Auditing Standards)

An independent audit can help your nonprofit:

• Demonstrate accountability to donors
• Strengthen board oversight
• Improve internal financial controls
• Increase confidence among grantmakers
• Improve financial reporting practices
• Enhance organizational transparency
• Support future growth and fundraising efforts

Many organizations find that these benefits extend well beyond satisfying Michigan’s annual filing requirements.

Why Choose ELT CPA LLC?

ELT CPA LLC provides independent nonprofit financial statement audit services for charitable organizations throughout Michigan.

Our professionals understand nonprofit accounting standards, charitable registration requirements, and the reporting expectations of the Michigan Attorney General’s Charitable Trust Section. We work closely with nonprofit leadership to complete efficient audit engagements while minimizing disruption to day-to-day operations.

Whether your organization is preparing for its first required audit or has undergone audits for years, ELT CPA LLC can help you navigate Michigan’s nonprofit reporting requirements with confidence.

Frequently Asked Questions

Does Michigan use contributions or revenue?

Michigan does not base the current CPA reporting thresholds on total organizational revenue. The CTS-02 renewal schedule uses contributions and certain fundraising amounts, less governmental grants, to determine whether reviewed or audited financial statements are required. (Michigan Attorney General, CTS-02 Renewal Solicitation Form)

What happens above $325,000 but below $575,000?

If the qualifying amount on the CTS-02 schedule is greater than $325,000 but less than $575,000, the organization must submit financial statements that are either reviewed or audited by a CPA. (Michigan Attorney General, CTS-02 Renewal Solicitation Form)

Who regulates charitable organizations in Michigan?

Charitable organizations subject to Michigan’s solicitation law register with the Michigan Attorney General’s Charitable Trust Section, which administers registration and renewal requirements. (Michigan Attorney General, Charitable Organizations)

When should we begin planning for our first audit?

Organizations approaching the $575,000 audit threshold should begin working with an independent CPA several months before fiscal year-end so there is sufficient time for planning and fieldwork. Organizations approaching the lower review threshold should also plan ahead. (Michigan Attorney General, CTS-02 Renewal Solicitation Form)