On November 21, 2025, the Downtown Billings Business Improvement District (BID) was notified by the State Local Government Services Bureau of the delinquent submittal of annual independent audits for FY23 and FY24. As provided by MCA 2-7-503, each local government special district receiving revenue in excess of $750,000, regardless of the source of revenue or financial assistance, shall have an audit. The BID had not been required to submit an audit prior to these fiscal years but had exceeded the threshold when downtown events were absorbed by the BID in 2022. This resulted in revenues exceeding $750,000. The BID and their contracted accountants have not received any notice of delinquency prior to the notice received on 11/21/25. The State has a pre-approved list of accounting firms which may perform the independent nonprofit audit required and the BID staff and Board of Directors are currently reaching out to each firm on the list to get quotes and schedule the audit. The Downtown Billings BID is 100% committed to completing these audits and remaining compliant with all State regulations. Going forward, the State has increased the audit threshold of revenue collected to $1,000,000 which, at this time, the BID is well under.
What is an independent nonprofit audit?
An independent audit is an examination of financial records, accounts, business transactions, accounting practices, and internal controls of a nonprofit by an “independent” auditor. “Independent” refers to the fact that the auditor/CPA is not an employee of the nonprofit but instead is retained through a contract for services and hence is “independent.”
- Independent audits are important for inspiring and maintaining donor trust because they demonstrate that the nonprofit is committed to financial transparency and accountability.
- Audited financial statements help the board of directors have more confidence in the organization’s finances because they are based on an analysis by an objective third party.
- Some private foundations require that grant applicants and grantees submit audited financial statements, or similarly certified financial statements, to be eligible for funding.
Why is an audit required of the Business Improvement District?
- Montana state law mandates audits once a special improvement district reaches a specific revenue threshold.
- As provided by MCA 2-7-503, each local government receiving revenue or financial assistance in excess of $750,000, regardless of the source of revenue or financial assistance, shall have an audit.
What are the benefits of an independent audit?
Maintaining compliance isn’t the only reason to conduct an independent financial audit; a nonprofit can build its reputation for integrity, transparency, and professionalism, by having a regular independent audit conducted and making it available to stakeholders and the public.
Here are the different benefits of an independent audit:
- Funding – Obtaining an audit will help an organization receive funding because certain funders, such as foundations, will only provide funding to an organization after they have received audited financial statements. This requirement also applies to certain banks and other potential lenders.
- Transparency – Obtaining an audit will show supporters and the general public that an organization is a legitimate and honest nonprofit organization. Even if an audit reveals issues, an organization will demonstrate its willingness to expose those issues and face them head-on. Stakeholders will know the organization takes financial management seriously and trust that the organization will use their contributions as promised to further the mission.
- Accountability – Obtaining an audit regularly will keep an organization accountable and help hold an organization to the highest standard when reporting financial information. If an organization conducts recurring audits every year or every few years, a nonprofit will be held accountable to the same high financial reporting and compliance standards. Even as an organization changes and expands, it can be confident that the finances are always secure and properly allocated.
- Clear opportunities for improvement. Audits can help an organization identify places where it could adjust policies and procedures, leading to more efficient processes and sound management. Plus, establishing a review schedule will help protect a nonprofit from common risks like fraud and theft.
