How Much Does a Nonprofit Audit Cost?

A nonprofit financial statement audit typically costs $5,000 to $25,000 for an organization with annual revenue under $10 million. A Single Audit (required when you spend $750,000 or more in federal awards) adds $5,000 to $15,000 on top of the financial statement audit, pushing the total to $10,000 to $40,000. Form 990 preparation runs $1,000 to $5,000 depending on the organization’s complexity and is almost always a separate engagement from the audit. These ranges assume reasonably maintained books; if the auditor has to reconstruct the accounting from bank statements and receipts, add $5,000 to $15,000 for the cleanup.

What determines the audit cost?

Five factors drive the price, roughly in order of impact.

Revenue and total assets. The audit fee scales with the size of the organization because the auditor must test a sample of transactions proportional to total activity. A nonprofit with $500,000 in revenue has fewer transactions, fewer bank accounts, and fewer programs to test than one with $10 million. The fee curve is not linear, but it is directional: more revenue means more audit hours.

Number and complexity of programs. Each program that receives separate funding (especially restricted grants) requires the auditor to test compliance with the grant terms, verify that restricted funds were spent according to the donor’s purpose, and confirm that the financial statements properly separate restricted and unrestricted net assets. A three-program organization with one government grant costs less to audit than a twelve-program organization with nine federal awards and three foundations.

Whether a Single Audit is required. The Single Audit threshold under 2 CFR 200.501 is $750,000 in federal awards expended during the fiscal year. If you cross this threshold, the auditor must perform additional compliance testing on each “major program” (determined by a risk-based formula), issue a separate report on compliance, and submit the audit to the Federal Audit Clearinghouse. This is a materially larger engagement than a financial statement audit alone.

Condition of the books. An auditor who receives a clean trial balance, reconciled bank statements, a complete schedule of grants, and a properly maintained chart of accounts with restricted fund tracking can work efficiently. An auditor who receives a QuickBooks file with unreconciled accounts, grants coded to a generic “Revenue” account, and no supporting documentation for in-kind donations cannot. The cleanup becomes part of the audit scope, and it shows up in the bill.

Location and firm type. Audit fees vary by geography (higher in New York, San Francisco, and Washington, DC than in smaller metros) and by firm size (regional and national firms charge more per hour than local firms, though they may also be faster).

What does each service level cost?

Nonprofits encounter four levels of CPA service, each with a different scope and price.

Service	Typical fee range	What the CPA does	When it’s required
Compilation	$2,000 to $5,000	Assembles financial statements from information the nonprofit provides; no assurance expressed	Rarely required externally; some small grantors or lenders accept it
Review	$3,000 to $10,000	Analytical procedures and inquiries; limited assurance (“nothing came to our attention”)	Some state AG offices accept a review below a revenue threshold; some foundation grants require it
Financial statement audit	$5,000 to $25,000	Tests transactions, confirms balances, evaluates internal controls, issues an opinion	Most states require an audit above $500K-$1M in revenue; many grantors require it; governance best practice above $250K
Single Audit (2 CFR 200)	$10,000 to $40,000 (includes the financial statement audit)	Everything in the audit plus compliance testing of major federal programs, schedule of expenditures of federal awards, additional reports	Required when the nonprofit expends $750,000+ in federal awards during the fiscal year

The difference between a review and an audit is not a markup. A review involves inquiries and analytical procedures (comparing this year’s numbers to last year’s, looking for unusual fluctuations). An audit involves testing individual transactions, confirming receivables with donors, observing physical assets, evaluating the design and operation of internal controls, and issuing a formal opinion. The audit requires more staff hours, more planning, and more liability insurance on the CPA firm’s side.

How much does Form 990 preparation cost?

Form 990 preparation is almost always a separate engagement from the audit. The two are related (the 990 draws from the audited financial statements), but they are different products with different deadlines.

Organization size	Typical 990 fee	What’s on the form
Under $200K in gross receipts	$500 to $1,000	Form 990-EZ (the short form), or 990-N (the e-postcard, which most CPAs do not charge for separately)
$200K to $2M in gross receipts	$1,000 to $2,500	Full Form 990 with schedules (Schedule A for public charity status, Schedule B for contributors, Schedule D for supplemental financial information)
$2M to $10M in gross receipts	$2,000 to $4,000	Full Form 990 with extensive schedules, compensation disclosure on Schedule J, related-organization reporting, governance responses
$10M+ in gross receipts	$3,000 to $5,000+	Full Form 990 with all schedules, detailed functional expense allocation, program service descriptions, major grants and awards

The Form 990 is a public document. Anyone can request it, and it is available on GuideStar/Candid within days of filing. Errors in compensation reporting, governance disclosures, or program service descriptions are visible to every donor, grantor, journalist, and state AG who looks. The 990 preparation fee pays for accuracy in a document that is permanently public.

What about state charitable registration?

Most states require charities that solicit donations from their residents to register with the state AG or Secretary of State. The registration requirements, deadlines, and fees vary by state. Some states require the audited financial statements to be filed with the registration. Some require a separate state-specific report (California’s RRF-1, New York’s CHAR500).

CPA firms that handle the 990 often also handle the state registrations, either as a bundled service or as a separate line item. Multi-state registration fees typically run $1,000 to $3,000 per year for a nonprofit registered in 10 to 20 states, plus the individual state filing fees (which range from $0 to $300 per state).

What drives the price up?

Four common budget-busters, all preventable.

Messy restricted fund tracking. If restricted grants are not tracked separately in the accounting system, the auditor has to reconstruct which dollars went to which program by reviewing every deposit and expenditure against the grant agreements. This is the most common reason nonprofits feel their audit is expensive. It is also the most fixable: set up restricted fund tracking in the accounting system before the audit, not during it.

First-year audit. The first audit of a nonprofit costs 20% to 40% more than subsequent years because the auditor must establish opening balances, understand the organization’s programs and funding sources, document internal controls for the first time, and review historical transactions. Year-two fees typically drop because the auditor carries forward the prior year’s work papers.

Late books. A nonprofit that delivers the books two months after the fiscal year end, with open items and unreconciled accounts, forces the auditor to compress the fieldwork into a shorter window (or extend the engagement over more months, with stop-and-start inefficiency). Either way, it costs more. Delivering clean, closed books within 30 days of year end is the single most effective way to control audit costs.

Questioned costs from the Single Audit. If the compliance testing on a federal program reveals questioned costs (expenditures that the auditor cannot determine were allowable under the grant terms), the auditor must perform additional procedures, issue findings, and the nonprofit must prepare a corrective action plan. Each finding adds hours to the engagement.

What should I do next?

Before you negotiate audit fees, answer three questions. Are you above the $750,000 federal award threshold (if so, the Single Audit is not optional)? Does your accounting system track restricted funds separately by grant (if not, fix this before the audit starts, not during it)? Can you deliver closed books within 30 days of your fiscal year end (if not, that is the highest-leverage improvement you can make)?

The auditor’s fee is a function of the work they have to do. The fastest way to lower the fee is to reduce the work by giving them clean books, organized documentation, and a reconciled schedule of federal awards.

• The Form 990 filing guide covers what goes on the return and what triggers additional schedules.
• The grant management guide covers restricted fund tracking and compliance monitoring.
• The executive compensation guide covers the excess benefit transaction rules and Schedule J disclosure.
• The governance and conflict of interest guide covers the governance questions on Part VI of the 990.
• The 501(c)(3) application guide covers the initial exemption process for organizations that have not yet applied.

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.