New Law Raises Connecticut Public Charities Audit Threshold as of July 1, 2023

For Connecticut Public Charity registrations originally due after July 1, 2023, Connecticut Public Acts 23-99 and P.A. 23-98, effectively raise the audit threshold for charitable organizations (subject to registration) to gross revenues greater than $1,000,000 and allows for an audit or review for organizations with gross revenues between $500,001 and $1,000,000. Gross revenue is calculated excluding grants or fees from government agencies or revenue from funds held in trust for the benefit of the organization.

Public Acts 23-98 and 99 state that, “For a financial statement [i.e., a charitable registration] that is initially due after July 1, 2023, a charitable organization shall include with the charitable organization's financial statement (A) an attestation that an audit report has been completed by a certified public accountant if the charitable organization had gross revenue in excess of one million dollars in the year covered by such report, or (B) an attestation that an audit or review report has been completed by a certified public accountant if the charitable organization had gross revenue in excess of five hundred thousand dollars but not more than one million dollars in the year covered by such report.”

With the law effective July 1, 2023, the new provision generally applies to each Connecticut charitable organization subject to registration with a fiscal year ending August 31, 2022 or later. CPAs should consider alerting their not-for-profit clients of the new requirements.

The chart below refers to the financial documents required for renewal applications.

The Connecticut Department of Consumer Protection (DCP) has indicated that the paper/PDF applications for public charity renewals and reinstatements have been updated on its website and can be found at https://portal.ct.gov/DCP/Charities/Charitable-Solicitation-Registration-Information. The information is also up to date for online applications.

Members of the CTCPA Not-for-Profit Organizations Committee and staff championed this change over several years, including meeting with the Department of Consumer Protection and contributing both written and oral testimony.  DCP included the new provision in its 2023 legislative package. Governor Lamont signed the public acts on June 26.