Audited financial statements

Many states require an audit above a revenue threshold (often $500K–$1M), and most institutional funders ask for one. Form 990 Part XII discloses whether the statements were compiled, reviewed or fully audited.

An audit is about accuracy, not efficiency — a wasteful charity can have spotless audited books. That's why it is one governance check among several, not a rating by itself.

Related terms

• Independent board — An independent board member is a director who isn't compensated by the organization and has no financial or family ties to it — watchdogs expect independents to hold the majority of votes.
• Form 990 — Form 990 is the annual information return that most U.S. tax-exempt organizations file with the IRS, disclosing their finances, governance and programs.