What it is
A nonprofit audit differs from a commercial one in what drives the risk. Revenue is mostly contributions and grants, whose recognition depends on whether a donor condition exists and whether a restriction applies. Net assets are split by donor restriction, and expenses must be reported by function.
This program covers contributions and grants, pledges and agency transactions, functional expense allocation, investments and endowments, net asset classification, and the point at which federal awards trigger a Single Audit. Each step carries an assertion, sample-size note, W/P reference and sign-off.
When to use it
- Planning the audit of a charity, foundation, association or other not-for-profit.
- When the entity receives conditional grants, pledges, in-kind gifts or endowment gifts.
- To document how you test donor restrictions and the release of net assets.
What’s inside
- Contributions, grants, conditions and restrictions
- Pledges, receivables and agency transactions
- Expenses and functional allocation, including fundraising cost
- Investments, endowments, board designations and net asset classes
- Government awards and the Single Audit threshold, with tie-outs and general procedures
Standard cited
This template follows AU-C 330 / ASC 958. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use. See AU-C 330 explained.
Questions
How do you tell a conditional contribution from an unconditional one?
A contribution is conditional when it has both a barrier the recipient must overcome and a right of return or release for the donor if it does not (ASC 958-605-25). Revenue is recognized as the barrier is met. Read the grant or gift agreement for each large item rather than relying on how the entity recorded it.
What is the audit risk in functional expense allocation?
Allocation percentages are judgments and often not documented. Test the basis (time studies, space, headcount), whether it is applied consistently, and the fundraising and management and general share, which donors and regulators watch.
When is a Single Audit required?
When the entity expends federal awards at or above the threshold in 2 CFR 200.501. The threshold is $1,000,000 for fiscal years beginning on or after October 1, 2024, and was $750,000 for earlier years.
Related templates
- Audit Program: Church and Religious Organization
- Audit Program: Accounts Receivable and Revenue
- Related Party Questionnaire for Management (AU-C 550 / ASC 850)
- Audit Planning Memo (AU-C 300)
Last updated 11/05/2026. All free templates.