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For charitable organizations, growth often brings new compliance responsibilities. In Arkansas, one of the most significant reporting milestones occurs when annual charitable contributions exceed $500,000. At this point, state law generally requires qualifying organizations to obtain an independent financial statement review performed by a Certified Public Accountant (CPA).

Understanding this requirement before your annual filing deadline can help your organization avoid delays, remain compliant with Arkansas law, and demonstrate financial transparency to donors, grantmakers, board members, and the public.

Whether your nonprofit serves Little Rock, Fayetteville, Bentonville, Fort Smith, Jonesboro, Rogers, Conway, or communities throughout Arkansas, planning ahead for your financial review can make the annual reporting process considerably smoother.

According to Arkansas Code § 4-28-403, charitable organizations receiving more than $500,000 but less than $1,000,000 in contributions during their preceding fiscal year are generally required to submit reviewed financial statements prepared by an independent CPA. Organizations receiving $1,000,000 or more in annual contributions are generally required to submit audited financial statements instead. (Arkansas Code § 4-28-403). Arkansas Secretary of State Form CR-03

Arkansas Financial Review Requirements at a Glance

Quick Answer

If your Arkansas charitable organization received more than $500,000 but less than $1,000,000 in contributions during its preceding fiscal year, Arkansas law generally requires your annual financial statements to be reviewed by an independent Certified Public Accountant (CPA) before they are submitted as part of your annual reporting requirements. Once annual contributions reach $1,000,000 or more, audited financial statements are generally required instead. (Arkansas Code § 4-28-403).

When Is a Financial Review Required in Arkansas?

Arkansas determines financial reporting requirements based on the amount of charitable contributions received during an organization’s preceding fiscal year.

Once annual contributions exceed $500,000, qualifying charitable organizations generally become subject to the state’s financial review requirement. Because the threshold is based on the prior fiscal year, organizations should monitor contribution totals throughout the year and begin planning well before annual reporting deadlines. (Arkansas Secretary of State Form CR-03).

The Arkansas Secretary of State administers charitable registration requirements and provides guidance regarding annual financial reporting obligations for organizations operating within the state. (Arkansas Secretary of State – Charitable Entities).

What Is a Financial Statement Review?

A financial statement review is an accounting service performed by an independent Certified Public Accountant in accordance with the Statements on Standards for Accounting and Review Services (SSARS) issued by the American Institute of Certified Public Accountants (AICPA). (AICPA Preparation, Compilation, and Review Standards).

During a review engagement, the CPA performs analytical procedures and inquiries of management to determine whether any material modifications should be made to the organization’s financial statements. Unlike an audit, a review does not involve extensive testing of transactions or internal controls and provides limited assurance rather than reasonable assurance. (AICPA: Compilation, Review, and Audit Differences).

For many Arkansas nonprofits, a review provides the level of financial reporting required by state law while helping demonstrate sound financial management to stakeholders.

Arkansas Law at a Glance

Many nonprofit organizations first encounter the financial review requirement after experiencing a successful fundraising campaign, receiving a major grant, or expanding their donor base.

Waiting until annual reporting deadlines approach can create unnecessary stress. Scheduling your CPA engagement several months in advance gives your organization time to gather documentation, address accounting questions, and complete the review before filing deadlines arrive.

Planning ahead also allows nonprofit leadership and board members to better prepare for future reporting requirements should contribution levels continue to grow.

Financial Review vs. Financial Audit

Although both services are performed by independent Certified Public Accountants, a financial review and a financial audit provide different levels of assurance. (AICPA: Compilation, Review, and Audit Differences).

Financial Review

A financial review generally includes:

• Analytical procedures
• Management inquiries
• Limited assurance
• Lower overall cost than an audit
• Appropriate for organizations exceeding the $500,000 contribution trigger but below Arkansas’ audit threshold  (Arkansas Code § 4-28-403).

Financial Audit

A financial audit generally includes:

• Detailed testing of financial records
• Confirmation of selected balances
• Evaluation of internal controls
• Higher level of assurance
• Generally required once annual contributions reach $1,000,000 or more under Arkansas law

Understanding which service applies helps organizations budget appropriately while ensuring compliance with state reporting requirements.

Preparing for Your Financial Review

Maintaining organized financial records throughout the year can significantly reduce the amount of time required to complete your review engagement.

Your CPA will commonly request documentation such as:

• Statement of Financial Position
• Statement of Activities
• General ledger
• Trial balance
• Bank reconciliations
• Contribution records
• Grant agreements
• Investment schedules
• Board meeting minutes
• Debt agreements
• Significant contracts

Preparing these records before the engagement begins allows the review process to proceed more efficiently and minimizes delays.

Benefits Beyond Compliance

Although a financial review is required once Arkansas’ contribution threshold has been exceeded, many nonprofit organizations find additional value in the engagement.

An independent financial review can help:

• Improve donor confidence
• Demonstrate financial transparency
• Strengthen grant applications
• Support effective board oversight
• Identify accounting issues before they become larger concerns
• Improve internal financial reporting processes

Many grantmakers and institutional donors appreciate organizations that maintain strong financial reporting practices, even when not specifically requested.

Why Choose ELT CPA LLC?

ELT CPA LLC provides financial statement review services for charitable organizations throughout Arkansas.

Our team understands nonprofit financial reporting requirements and works with organizations of all sizes to complete review engagements efficiently while helping management remain focused on its mission.

We provide:

• Independent financial statement reviews
• Nonprofit accounting guidance
• GAAP financial statement assistance
• Annual reporting support
• Remote service throughout Arkansas
• Responsive communication throughout the engagement

Whether your organization is preparing for its first financial review or has completed reviews in prior years, ELT CPA LLC is ready to help.

Frequently Asked Questions

What triggers a financial review in Arkansas?

A charitable organization generally must obtain a financial statement review once it receives more than $500,000 but less than $1,000,000 in contributions during its preceding fiscal year. (Arkansas Code § 4-28-403).

Does every nonprofit need a financial review?

No. Arkansas’ reporting requirements depend on the amount of annual contributions received and whether the organization is required to register under Arkansas charitable solicitation laws. (Arkansas Secretary of State – Charitable Entities).

Is a financial review less extensive than an audit?

Yes. A financial review provides limited assurance through analytical procedures and inquiries, while an audit involves substantially more testing and provides a higher level of assurance. (AICPA: Compilation, Review, and Audit Differences).

When should our organization begin planning?

Organizations should begin planning several months before annual filing deadlines to ensure adequate time for preparation, review completion, and any necessary follow-up.