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CPA | Manager
2024 ushers in significant regulatory relief for Illinois nonprofit organizations, thanks to Public Act 103-0121. This new legislation raises the contribution revenue thresholds that determine the filing requirements for nonprofits in Illinois, potentially reducing the financial obligation for smaller organizations.
The changes to the contribution revenue thresholds for Illinois not-for-profit organizations are as follows:
The changes brought by Public Act 103-0121 apply to organizations with an initial due date (without considering any extension) occurring after January 1, 2024. Consequently, this requirement applies to organizations with a fiscal year ending on June 16, 2023, and later.
One of the advantages of this regulatory update is the potential cost savings for nonprofits. Reviewed financial statements typically cost less than audited financial statements. This reduction in expenses could be a substantial benefit for smaller organizations operating on tight budgets.
However, nonprofits should consider the long-term implications of switching from audits to reviews. If an organization has decreased revenue in the current year but anticipates revenue growth in the future, it might be more cost-effective to continue with audits despite the immediate savings from reviews. This is especially true if grantors or financing arrangements require audited financial statements. Initial or resumed audits require more setup time and effort from both clients and auditors, so maintaining continuity with audits could lead to greater efficiency and reduced future workload.
As fiscal year-end approaches, organizations should begin to review their year-to-date activity. A proactive review will help in deciding what if any services are needed. Ensuring that books and records are in order will facilitate efficient and effective services from a CPA firm. Monthly bank reconciliations completed through the fiscal year-end date are a good starting point. These reconciliations are a good indicator to CPAs of an organization’s readiness for an audit.
If you are a nonprofit and want to learn more about how Public Act 103-0121 may impact you, please reach out to the CK nonprofit team at (630) 953-4900.