fbpx

< Back to Thought Leadership

NFPs With Operations In Indiana – Be Aware Of Unique State Audit Requirements

The Indiana State Board of Accounts (SBA) has the responsibility of examining the accounts and financial records for all state entities and entities receiving public money within the state of Indiana. A non-governmental entity that disburses public funds may be subject to the Indiana state audit requirements. An entity is defined as a provider of goods, services, or other benefits maintained in whole or in part at public expense, or supported in whole or in part by appropriations, public funds, or taxation.

What this means for your not-for-profit organization is that if you receive public funds (federal, state, or local funding), while you might not be subject to an audit in accordance with the federal requirements under Uniform Guidance (referred to as a Single Audit), you might have a State of Indiana audit requirement.

In order to monitor compliance with state regulations, the state requires the annual filing of the E-1 Annual Entity Report with the Indiana State Board of Accounts by not-for-profit entities receiving public assistance. The E-1 report is due 60 days after the entity’s year-end and details all funds received and disbursed from all federal, state, and local government agencies.  Funds received are categorized into four categories:

  • direct federal grant
  • federal grant passed through state or local government
  • fee for service
  •  and state and local

Determining the category into which your funding is classified can have an impact on whether the funds are subject to audit. These categories are defined by the state in the Indiana Gateway Users Guide. The State Board of Accounts will ultimately determine the classification of funds and from the E-1 submitted, will determine whether an audit is required, or a waiver is granted. Organizations participating only in nonfederal “fee for service” arrangements are not subject to the audit and reporting requirements.

Generally, the state requires an entity-wide audit when 50% or more of the funds expended by the entity are from a public source. Not-for-profit entities with disbursement of public funds that are less than 50% of total funds expended, or greater than 50% but less than $200,000, can be granted a waiver by the State Examiner. This calculation is dependent upon the type of funding received. Certain funds may not be included in the percentage calculation. Therefore, as noted above, it is important to classify the type of public funding accurately to ensure the SBA has correct information to make a proper determination.

The entity will be notified by the SBA of its audit requirement or waiver granted. Those entities requiring an audit should follow the audit process as outlined in the Uniform Compliance Guidelines for Examination of Entities Receiving Financial Assistance from Governmental Sources as published by the SBA. Those granted a waiver will be required to provide other information. Please note that a waiver of the state requirement might not relieve the organization of a required Single Audit under Uniform Guidance.

If you have questions or would like to know more, please contact Chris Mickelson at cmickelson@blueandco.com.

 

Tax Reform Resource Center

Read More Thought Leadership Articles Like what you read? Subscribe to our newsletter. Click Here.

heart and a jar of money

Unveiling the Dynamics of Donor-Restricted Contributions

By Greg Jackson, CPA, Principal at Blue & Co. Many not-for-profit organizations rely on public support (grants and contributions) to finance their mission. When that public support includes donor-restricted grants and contributions, those restricted amounts must be reported and accounted for in accordance with the related restrictions attached to the funds. When recording a donor-restricted […]

Learn More

How to Manage Clinical Validation Denials

In the past several years, hospitals have continued to feel the impact on revenue from Clinical Validation Denials (CVD). The need for a robust CDI team to capture support for clinical indicators while the patient is still in house is more imperative than ever. The other overwhelming piece for revenue cycle teams to manage is […]

Learn More

Margin Improvement: Optimizing Financial Performance

Ensuring the long-term financial viability of a health system requires constant attention to the operating statement. This involves assessing the current state of your healthcare organization and critically comparing the current condition to industry and/or internal benchmark standards. Ultimately, this assessment assists management implement an ongoing margin improvement process to increase the likelihood of achieving […]

Learn More