What land trusts should know about financial reporting requirements
Written by Dana Chabot, Certified Public Accountant and Gathering Waters’ financial manager
Many land trusts will soon be closing out the 2018 fiscal year and preparing a budget for 2019. This is a great time to make sure you are aware of year-end financial reporting requirements.
The State of Wisconsin requires not-for-profit organizations that receive $500,000 or more in private (i.e., non-governmental) contributions and grants to prepare and submit audited financial statements. Generally speaking, contributions of land count toward the $500,000 threshold. State of Wisconsin rules also require not-for-profit organizations to submit financial statements reviewed by a CPA if private contributions are between $300,000 and $500,000.
In addition, Land Trust Standards and Practices require performance of an external financial evaluation every year. Standard 6C states that member organizations should “obtain an annual financial audit, review, or compilation by an independent certified public accountant or a qualified accounting professional, in a manner appropriate for the scale of the land trust.
At a minimum, this means that land trusts that do not prepare audited or reviewed financial statements should have end-of-year financial statements compiled by an independent CPA or qualified accountant. The American Institute of Certified Public Accountants has prescribed standards governing the performance of a compilation. You should be sure that the professional you engage to prepare a compilation is familiar with these standards.
One more thing — accredited land trusts, and those planning to become accredited in the next year, are subject to additional financial reporting requirements. Land trusts with total revenue (including government grants, but excluding the value of donated land) exceeding $750,000 must have an audit. Land trusts with total revenue greater than $100,000 but less than $750,000 must have a review. All others are required to have financial statements compiled by a CPA or “an independent qualified accountant.” (A board member of the land trust would not be considered to be independent.)
For further guidance on the subject of audits, reviews, and compilations, log in to the Land Trust Alliance’s Learning Center (available to Alliance members), and click on the magnifying glass in the left navigation, and enter “Practice 6C: External Financial Evaluation” in the search field.
If you have questions or need assistance, please contact Meg Domroese.
