Based on NCCS's national Electronic Filing Survey of Form 990 filers (485 respondents) conducted in early 2002, we estimate that slightly less than 70% of organizations have financial audits. (The margin of error is +/-5%.) For organizations with less than $100,000 in total expenses, the percentage is around 49%. (Given the small number of organizations in this category, the confidence interval is a large +/-11%.). For organizations with total expenses greater than $500,000 the percentage having audits jumps to more than 90%.
For details on the survey methodology, consult the full report available through NCCS.
Parts IV-A and B of the Form 990 provide another source for assessing the incidence of audits. Unfortunately, items from these parts are only available for a small percentage of returns (the early ones) in the NCCS-GuideStar National Nonprofit Database ("the digitized database").
An analysis of Parts IV-A and B using the Statistics of Income sample for Form 990 filers only (not 990-EZ filers) suggest that a lower percentage of organizations, only 58%, complete an audit -- if one assumes that all audited organizations correctly completed these parts of the form. For large organizations with more than $10 mil. in total expenses, the percentage jumps to 89%, still lower than one would expect for organizations of this size.
Which set of numbers is correct? At this point, I don't believe we know, but we hope this analysis provides us with an accurate indication of the range of audit usage.