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CPA Now
Feb 09, 2018

Revised Financial Reporting Requirements for Charitable Organizations Now Law

By Peter Calcara, vice president – government relations


On Dec. 22, 2017, Gov. Tom Wolf signed into law much needed changes to the Pennsylvania Solicitation of Funds for Charitable Purposes Act, which has been championed by the PICPA. House Bill 1420 and House Bill 1421 – now Acts 71 and 72, respectively – were sponsored by PICPA member and state Rep. Keith Greiner (R-Lancaster), and will go into effect on Feb. 20, 2018. The bills passed both chambers of the General Assembly without a single negative vote – 189-0 in the House and 49-0 in the Senate.

Regulations Stamp image“I recognize the need for continuity in the way charitable organizations are measured and monitored,” Greiner says. “My legislation is an attempt to align state guidelines with requirements set forth by the federal government for audits of state and local governments and nonprofit organizations.”

Under current Pennsylvania law, once a charitable organization reaches annual contributions of $300,000 or more, it has to file an audited financial statement prepared by an independent CPA. As noted in a PICPA issue brief, these thresholds are extremely low in today’s marketplace. For comparison, as part of the federal audit guidance update, effective Dec. 31, 2015, all nonfederal entities that expend $750,000 or more of federal awards in a year are required to obtain an annual Subpart F audit.

Act 71 raises the threshold of annual contributions to $750,000 before it triggers the need for an audit. Those receiving annual contributions of at least $250,000, but less than $750,000, will be required to have a review or audit; and those with annual contributions of at least $100,000, but less than $250,000, will be required to have a compilation, review, or audit. A compilation, review, or audit will be optional for any charitable organization that receives annual contributions less than $100,000.

According to information posted by the Pennsylvania Bureau of Corporations and Charitable Organizations (BCCO), which oversees compliance of the law by the more than 12,000 charities soliciting in Pennsylvania, the Act 71 thresholds for audit, review, or compilation of financial reports will be applied to all charitable registration renewals due Feb. 15, 2018 (March 31, 2017, fiscal year ends) and all subsequent renewals, as well as to all new charitable organization registrations for all other fiscal year ends filed on or after Feb. 20, 2018.

Act 72 clarifies that annual registration statements for charitable organizations must be refiled annually based on the postmark date instead of the date it is received at the BCCO. Act 141 of 2014, which the PICPA championed, changed the renewal date for charitable organizations from 135 days after the close of the fiscal year to the 15th day of the fifth month following the close of the fiscal year. But, an interpretation by the BCCO that any registration statement postmarked on the due date will not be timely filed created confusion.

In addition, Act 72 increases the deemed approved time for charitable organization, solicitor, and fundraising counsel registration filings from 10 to 15 days.

Finally, under Act 72, due dates will be applied to all charitable organization registration renewals due Feb. 15, 2018 (March 31, 2017, fiscal year ends) and all subsequent renewals, and to new charitable organization registrations for all other fiscal year ends filed on or after Feb. 20, 2018.

The PICPA thanks Greiner for all his guidance and support throughout the legislative process.

The issue is a good example of PICPA’s legislative advocacy efforts in action. Together with our nearly 22,000 members, the PICPA can achieve positive changes that benefit Pennsylvanians and the CPA community.



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