The Evangelical Council for Financial Accountability (ECFA) requires their members to submit annual financial statements as a condition of membership. A CPA is required to be involved with those financials.
ECFA has announced two changes to their requirement: the cutoff for a compilation and clarifying an independence requirement.
Before you make any changes, check with your funders to see if they will accept a change in the level of services provided by your CPA.
Audits – $3M – A CPA is required to audit the member’s financial statements if total revenue is over $3 million.
Reviews – $2M – A CPA is required to review the financial statements if total revenue is over $2 million. This is an increase from a cutoff of $1 million. An audit is obviously allowed.
Compilations – under $2M – A CPA is allowed to compile the financial statements if total revenue is under $2 million. This is an increase from $1M.
Independence requirement for compilations – The ECFA will accept compiled financial statements when the CPA is not independent if the lack of independence is only because the CPA providing accounting services. In addition, the cause for the impairment of independence must be disclosed.
The increase from $1M to $2M for a compilation and clarifying the independence issue is a change since the last revision announced in 2010. I discussed that change in this post.