What it is
A not-for-profit audit rests on representations the auditor cannot get from a bank or a customer: what donors stipulated, which promises are conditional, how expenses are allocated and what the board decided. This is a complete letter with the standard representations written for a not-for-profit.
It covers net asset classification, board designations, endowment, contributions and pledges, gifts in kind, conditional grants, functional expense allocation, liquidity disclosures, minutes, related parties, tax-exempt status and government funding.
When to use it
- On every audit of a charity, foundation, association or other not-for-profit.
- When the organization has donor-restricted gifts, endowment funds or conditional grants.
- When the board or a committee made designations or related party decisions during the year.
What’s inside
- Net asset classification, board designations, endowment and release representations
- Contribution, pledge, gift in kind and conditional grant representations
- Functional expense allocation and liquidity and availability representations
- Minutes, related party and tax-exempt status representations
- Information, fraud, compliance and litigation representations, and the signature block
Standard cited
This template follows AU-C 580 / 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 580 explained.
Questions
Does a single audit need a different letter?
Yes. An audit under Uniform Guidance has federal award representations. Use the single audit representation letter for that engagement.
Why does the letter address the allocation method?
Functional expense allocation is a management estimate with no external evidence. A representation that a reasonable method is applied consistently supports the auditor’s other procedures.
What makes a contribution conditional?
A barrier the recipient must overcome and a right of return or release for the donor. A conditional promise is recognized when the condition is met. The letter has management confirm its classification.
Who signs for the organization?
The executive director or chief executive and the chief financial officer or the person with that responsibility.
Related templates
- Management Representation Letter (AU-C 580)
- Single Audit Management Representation Letter
- Disclosure Checklist: Not-for-Profit Entities (ASC 958)
- Nonprofit Financial Statements Template (ASC 958)
Last updated 11/05/2026. All free templates.