Attention: California Nonprofit Leaders
Has Your Organization Reached $2 Million in Revenue?
California Law May Require an Independent Audit.
If your nonprofit's gross revenue has crossed the $2 million threshold, the California Nonprofit Integrity Act mandates an annual independent CPA audit — and most organizations don't find out until it's too late.
You don't need to navigate this alone. Gerber & Company's experienced audit team helps California nonprofits meet this requirement efficiently, accurately, and without disrupting your operations.
Certified Public Accountants | Los Angeles, CA | Decades of Experience
Is Your Nonprofit Legally Required to Have an Audit?
Under California Government Code §12586 — part of the Nonprofit Integrity Act of 2004 — any charitable organization with annual gross revenue of $2 million or more is required by law to:
Obtain an annual independent financial statement audit
Performed by a licensed California CPA
Establish a separate, independent audit committee
To oversee the process and report finding to the board
This is not optional. It is not a recommendation. It is a legal requirement.
Many nonprofit leaders – Executive Directors, Finance Directors, Board Treasurers, and Audit Committee members – are unaware of this requirement until they are already out of compliance. The consequences of non-compliance can include loss of charitable registration, ineligibility for state grants and contracts, and serious reputational damage with donors and funders.
Good news is that compliance is straightforward when you work with the right CPA firm
$2M
The Threshold
The gross revenue threshold that triggers California's mandatory audit requirement under the Nonprofit Integrity Act (SB 1262)
Annual
Every Year
Once your organization crosses the threshold, an independent audit is required every fiscal year, not just once
CPA
Licensed Professional
The audit must be performed by a licensed, independent Certified Public Accountant, not your bookkeeper or internal staff
This Applies to You If You Are a...
The audit requirement affects everyone in your organization’s leadership. Here is that it means for your role:
Executive Director
As the operational leader of your organization, you are responsible for ensuring your nonprofit meets all regulatory requirements. An independent audit protects your organization's charitable registration, preserves donor trust, and demonstrates to your board that financial governance is being upheld. Without it, your organization's ability to operate — and your own professional standing — is at risk.
Finance Director / CFO
You are closest to the numbers. You know that clean, audited financials are not just a legal requirement — they are a critical tool for financial planning, grant applications, and board reporting. An independent audit validates your work, strengthens internal controls, and gives your organization the financial credibility it needs to grow.
Board Treasurer
As a fiduciary of the organization, you have a legal duty to ensure the nonprofit's finances are properly overseen. The Nonprofit Integrity Act requires your board to establish an independent audit committee. Ensuring an annual audit is completed is one of the most important governance responsibilities you hold.
Audit Committee Member
California law requires a separate audit committee — distinct from the finance committee — to recommend the hiring of the auditor, review the scope and results of the audit, and report findings to the full board. Your role is essential to compliance, and working with an experienced CPA firm makes your committee's work significantly easier.
The Cost of Non-Compliance Is Too High to Ignore
Failing to obtain a required independent audit is not simply an administrative oversight — it carries real consequences for your organization.
California’s Attorney General has the authority to investigate and take action against nonprofits that fail to comply with the Nonprofit Integrity Act. The risks include:
• Loss of charitable registration with the California Attorney General’s Registry of Charitable Trusts, which can halt fundraising activities
• Ineligibility for state grants, government contracts, and major foundation funding that requires audited financials
• Erosion of donor and board confidence when financial transparency cannot be demonstrated
• Personal liability exposure for board members and officers who fail to uphold their fiduciary duties
• Reputational damage that can take years to repair
The good news is that compliance is entirely achievable — and the process does not have to be complicated. The right CPA firm makes all the difference.
Gerber & Co. Makes Your Nonprofit Audit Simple, Efficient, and Compliant
We have guided organizations through the audit process for decades. We know what California requires — and we know how to get you there without unnecessary disruption.
At Gerber & Company, we understand that nonprofit leaders are focused on their mission, not on navigating complex regulatory requirements. That is why our audit team takes a structured, transparent approach from day one — so you always know where you stand, what is needed, and what comes next.
We do not treat audits as a checkbox exercise. We treat them as an opportunity to strengthen your organization’s financial foundation, improve internal controls, and give your board, donors, and regulators the confidence they need in your financial reporting.
Deep Industry Knowledge
Our team has extensive experience working with nonprofit organizations across California. We understand the specific accounting standards, reporting requirements, and governance structures that apply to your sector.
Structured, Transparent Process
From the initial engagement through the delivery of your audited financial statements, we guide your team through every step. We communicate clearly, set realistic timelines, and minimize disruption to your operations.
Experienced, Credentialed Professionals
TeamGerber comprises seasoned CPAs who have worked at major firms. Our quality control standards are reviewed tri-annually through the AICPA Peer Review process.
What the Audit Process Looks Like
Many nonprofit leaders are unfamiliar with the audit process. Here is a straightforward overview of what to expect when you work with Gerber & Company.
Consultation & Engagement
We begin with a brief consultation to understand your organization's situation, fiscal year, and timeline. We review your current financial records and discuss the scope of the engagement. Once we agree on terms, we formalize the engagement in writing.
Audit Readiness Preparation
Before the audit fieldwork begins, we provide your team with a clear list of documents and information we will need. This preparation phase is designed to make the process as smooth as possible for your staff.
Fieldwork & Testing
Our audit team conducts a thorough examination of your financial statements, internal controls, and supporting documentation. We test transactions, review compliance with donor restrictions, and assess the accuracy of your financial reporting.
Review & Communication
We share our findings with your leadership team and audit committee before issuing the final report. This gives you the opportunity to address any issues and ensures there are no surprises.
Audited Financial Statements
We issue your audited financial statements along with our independent auditor's report — the formal deliverable required by California law. These statements are ready for submission to the California Attorney General's Registry of Charitable Trusts.
Find Out If Your Nonprofit Needs an Audit — In One Brief Conversation
Schedule a free consultation with our audit team. We will review your organization’s situation, explain exactly what California law requires, and outline a clear path to compliance — with no pressure and no obligation.
Not sure if you qualify? Not sure where to start? That is exactly what the consultation is for. Our team will give you a straight answer and a clear next step.
Or call us directly: (310) 552-1600