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Virginia: What Nonprofits Need to Know About Audit vs. Review Requirements State Requirements (Virginia) Virginia law does not require every nonprofit to obtain audited or reviewed financial statements. However, revenue thresholds matter, particularly when applying for or maintaining certain state tax exemptions.

Under Virginia law:

• If a nonprofit’s gross annual revenue is $750,000 or more, the organization must obtain a financial review performed by an independent CPA.

• If gross annual revenue reaches $1.5 million or more, the Commonwealth may require an independent audit instead of a review.

What This Means in Practice

• $0 – under $750,000 in annual revenue
  No state-mandated review or audit is required (though funders or grantors may still require one).

• $750,000 or more in annual revenue
  A CPA financial review is required.

• $1.5 million or more in annual revenue
  A CPA audit may be required in lieu of a review, at the discretion of the state.

Why This Matters

Failing to meet these thresholds can jeopardize a nonprofit’s compliance with Virginia tax exemption and charitable registration requirements. Planning ahead—by engaging with MillerMusmar CPAs early—helps avoid last-minute compliance issues, delays, and costly rush engagements.

Nonprofits Operating in Multiple States

If your organization operates across state lines, Virginia’s rules are only part of the picture. Each state may impose its own requirements based on specific activities conducted within that state.

Charitable Solicitation

Most states require nonprofits that solicit donations to register. Depending on the state and revenue level, required financial statements may include:

• No financial statements

• Internally prepared (unaudited) statements

• CPA-reviewed financial statements

• CPA-audited financial statements

Thresholds vary significantly. A nonprofit soliciting in ten states may face ten different compliance standards.

State Tax Exemptions

If your organization claims sales and use tax exemptions or other state tax benefits, those states may also require reviewed or audited financial statements. These requirements are separate from charitable solicitation rules and vary by jurisdiction.

Key Takeaway

There is no single nationwide audit requirement for nonprofits. Requirements depend on:

• Revenue levels

• State(s) of operation

• Fundraising activities

• Tax exemption claims

• Grantor or contract terms

Many multi-state nonprofits choose to meet the highest required standard (often an audit) to satisfy multiple jurisdictions efficiently.

Contact MillerMusmar CPAs for more information.

At MillerMusmar, our mission is to empower people to thrive every day. We are dedicated to delivering lasting, meaningful value to our team members, clients, and communities. With a people-first culture, our professionals deliver expert tax, assurance, and advisory services to a wide range of clients throughout the DMV region.MillerMusmar CPAs is a proud independent member of BDO. To learn more about our firm and services, please visit our website. www.MillerMusmar.cpa

If you have questions or need assistance implementing these strategies, don’t hesitate to reach out to us at +1-703-437-8877 or info@millermusmar.com

Written by Sara Ghanem, CPA, Audit Department at MillerMusmar CPA.