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As charitable organizations grow, their financial reporting responsibilities often become more extensive. In Massachusetts, an important compliance milestone occurs when a charitable organization reports more than $500,000 but not more than $1,000,000 in gross support and revenue during its fiscal year.

Under Massachusetts General Laws Chapter 12, Section 8F, public charities with more than $500,000 in gross support and revenue must submit CPA-reviewed or audited financial statements with their annual report. If gross support and revenue is more than $1,000,000, audited financial statements are required; organizations above $500,000 but not above $1,000,000 may submit a CPA review report instead. (Massachusetts General Laws ch. 12, § 8F; Massachusetts AGO audit and review guidance)

Understanding these requirements before your filing deadline can help your organization remain compliant while demonstrating financial transparency to donors, grantmakers, board members, and the public.

Whether your nonprofit serves Boston, Worcester, Springfield, Cambridge, Lowell, New Bedford, Quincy, or communities throughout Massachusetts, planning ahead for your financial review can simplify your annual filing and help avoid unnecessary delays.

Massachusetts Financial Review Requirements at a Glance

Quick Answer

If your Massachusetts charitable organization reports more than $500,000 but not more than $1,000,000 in gross support and revenue, a CPA review report can generally satisfy the state financial statement requirement. Organizations reporting more than $1,000,000 must submit audited financial statements. (Massachusetts AGO audit and review guidance)

When Is a Financial Review Required in Massachusetts?

Massachusetts bases its reporting requirements on an organization’s gross support and revenue reported for the fiscal year.

Organizations reporting more than $500,000 but not more than $1,000,000 in gross support and revenue may generally submit reviewed financial statements with their annual filing. Once gross support and revenue exceeds $1,000,000, audited financial statements are required. (Massachusetts General Laws ch. 12, § 8F)

These financial statements are submitted as part of the organization’s annual filing with the Massachusetts Attorney General’s Public Charities Division. (Massachusetts Online Charity Filing Portal)

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 include extensive testing of transactions or internal controls and provides limited assurance rather than reasonable assurance.

For many Massachusetts charitable organizations, a financial review satisfies state reporting requirements while increasing financial transparency and confidence among donors and stakeholders.

Massachusetts Law at a Glance

Massachusetts requires public charities subject to the filing rules to submit an Annual Form PC to the Attorney General’s Non-Profit Organizations/Public Charities Division. Annual filings are made through the online Charity Portal, and the required CPA attachment depends on the organization’s gross support and revenue. (Massachusetts Online Charity Filing Portal)

Financial Review vs. Financial Audit

Although both services are performed by independent Certified Public Accountants, they provide different levels of assurance.

Financial Review

A financial review generally includes:

• Analytical procedures
• Inquiries of management
• Limited assurance
• Lower cost than an audit
• Review option generally available for organizations reporting more than $500,000 but not more than $1,000,000 in gross support and revenue.

Financial Audit

A financial audit generally includes:

• Detailed testing of financial records
• Confirmation procedures
• Evaluation of internal controls
• Reasonable assurance
• Required when gross support and revenue is more than $1,000,000.

Preparing for Your Financial Review

Maintaining organized financial records throughout the year can significantly streamline your review engagement.

Your CPA will commonly request:

• Statement of Financial Position
• Statement of Activities
• General ledger
• Trial balance
• Bank reconciliations
• Revenue schedules
• Grant documentation
• Board meeting minutes
• Investment schedules
• Significant contracts
• IRS Form 990
• Annual Form PC preparation information

Preparing these records before the engagement begins can reduce delays and help ensure your annual filing is completed on time.

Benefits Beyond Compliance

Although Massachusetts requires a CPA-level financial statement submission once the statutory threshold has been crossed, organizations in the review range often realize additional benefits from the engagement, including:

• Greater donor confidence
• Improved grant opportunities
• Increased financial transparency
• Better board oversight
• Stronger internal accounting processes
• Enhanced organizational credibility

Why Choose ELT CPA LLC?

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

Our team understands nonprofit financial reporting requirements and works closely with charitable organizations to complete review engagements efficiently while minimizing disruption to day-to-day operations.

Our services include:

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

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

Frequently Asked Questions

What triggers a financial review in Massachusetts?

Massachusetts requires a CPA-reviewed or audited financial statement when gross support and revenue is more than $500,000. If the amount is more than $500,000 but not more than $1,000,000, a CPA review report may generally be submitted instead of an audit. (Massachusetts AGO audit and review guidance)

What is Form PC?

Form PC is the annual financial reporting form filed with the Massachusetts Attorney General’s Non-Profit Organizations/Public Charities Division. Depending on gross support and revenue, the filing may need to include CPA-reviewed or audited financial statements. (Massachusetts public charities forms)

When is an audit required?

Organizations reporting more than $1,000,000 in gross support and revenue must submit audited financial statements. (Massachusetts General Laws ch. 12, § 8F)

When should our organization begin planning?

Organizations should engage their CPA several months before their annual filing deadline to allow sufficient time for planning and completion of the review engagement.