Audit, Review Engagement or Compilation: What Does Your Charity Need?
Quick answer: It depends on your governing law, revenue and funders. Under Ontario’s ONCA, public benefit corporations with revenue of $500,000 or more need an audit, while smaller ones can choose a review engagement or, under $100,000, neither, with member approval. Federal CNCA soliciting corporations need an audit above $250,000. In the US, spending $1 million or more in federal awards triggers a Single Audit, and many states and funders set their own requirements.
“Do we need an audit?” is one of the most common questions boards ask, and the honest answer is: it depends on where you’re incorporated, how much revenue you have, and what your funders require. Here is how to work it out.
Three levels of assurance
- Audit: the highest level. An independent public accountant tests your records and controls and gives an opinion that the financial statements are presented fairly.
- Review engagement: a lower level of assurance, mainly enquiry and analysis. It is less expensive than an audit and often enough for smaller organizations.
- Compilation: the accountant assembles financial statements from your records without giving assurance on them.
Only licensed public accountants can perform audits and review engagements. A fractional CFO or bookkeeper prepares you for them and works alongside your auditor, but cannot perform them.
Ontario: ONCA
For a public benefit corporation, which includes every charity incorporated under the Ontario Not-for-Profit Corporations Act:
| Annual revenue | Requirement |
|---|---|
| $100,000 or less | Audit required, but members can waive both audit and review by extraordinary resolution |
| Over $100,000 and under $500,000 | Audit required, but members can choose a review engagement by extraordinary resolution |
| $500,000 or more | Audit required |
An extraordinary resolution needs at least 80% of the votes cast at a members’ meeting, and the waiver applies year by year.
Federal: CNCA
For soliciting corporations under the Canada Not-for-profit Corporations Act, generally those receiving more than $10,000 from public sources:
| Gross annual revenue | Requirement |
|---|---|
| $50,000 or less | Review engagement, unless members unanimously agree not to appoint a public accountant, or require an audit |
| Over $50,000 up to $250,000 | Audit, unless members choose a review engagement by special resolution |
| Over $250,000 | Audit required |
Other provinces have their own rules, and thresholds can change by regulation, so check your current governing statute and bylaws.
United States
There is no single federal audit rule for all nonprofits. Organizations that spend $1 million or more in federal awards in a fiscal year (for fiscal years beginning on or after October 1, 2024) need a Single Audit under the Uniform Guidance. Many states require an audit or review once revenue passes a state-set threshold, especially for charities registered to solicit donations.
Don’t forget your funders
Even if the law doesn’t require an audit, grant agreements, government contracts and major foundations often do. Read your funding agreements: they frequently set a higher bar than the statute.
How to make any engagement faster and cheaper
- Reconcile every bank, credit card and payroll account monthly.
- Keep restricted fund, deferred revenue and grant schedules up to date.
- Prepare the auditor’s request list before fieldwork starts.
- Fix last year’s management-letter points before this year’s audit begins.
Our audit preparation service gets your file ready so your auditor can spend less time and send a smaller bill.
Frequently asked questions
Does every charity in Canada need an audit?
No. The CRA does not require an audit to file the T3010. Audit requirements come from your incorporating statute, such as ONCA or the CNCA, your bylaws and your funding agreements. Smaller organizations can often use a review engagement instead, with member approval.
What is the difference between an audit and a review engagement?
An audit tests transactions and controls and provides reasonable assurance that the financial statements are fairly presented. A review engagement relies mainly on enquiry and analysis and provides limited assurance. Reviews cost less but some funders require a full audit.
When does a US nonprofit need a Single Audit?
When it spends $1 million or more in federal awards in a fiscal year beginning on or after October 1, 2024. Before that date the threshold was $750,000.
Disclaimer: This article is for general information only and reflects the rules and guidance available when it was published on October 14, 2026. Tax, charity and accounting rules change over time, and every organization’s situation is different. Please consult a qualified lawyer or accountant before relying on this information. Linked CFO is not a public accounting firm, and this article is not legal, tax or accounting advice.
Not sure where your charity stands? Take the free 2-minute finance health check or request a free intro call.
