The Essential Guide to Nonprofit Audits
If you’re running a non-profit organization, there’s a good chance you’ll need a financial audit at the end of the fiscal year. This is different and not to be confused with an IRS audit, which can make an audit sound intimidating. A nonprofit audit, however, is conducted by an independent auditor of your choice. In this short guide, we’ll share some tips and tricks to better prepare for your audit and choose the right independent auditor for your nonprofit.
When do I need a not for profit audit?
Whether or not you need an audit depends on what state you’re doing business in and the size of your organization. No matter what state you’re in, if your nonprofit is expending more than $750,000 a year in federal funds you’ll be required to meet federal audit requirements.To check the laws in your state, we recommend this resource
from the National Council of Nonprofits.
Despite state and federal laws, it’s a good idea to have an audit regardless. Working with an independent auditor is a great opportunity to better understand your organization’s finances and find opportunities to improve in the next year. Plus, you can publish your audit as a way to establish trust and transparency with potential donors. Not to mention, some state and federal grants will require one anyways if you choose to apply for one. All in all, getting an audit is just a smart business practice.
How do I find someone to audit my nonprofit?
An independent audit should be conducted by a licenced CPA, and someone who has experience and dedication to audit work. Look for an established accounting firm in your area with a proven track record of professionalism and expertise in conducting audits.
It’s also important to look for a firm that is easy to communicate with, because the ideal scenario is to build a long-term relationship with a trusted professional. At Harshwal Accounting
, we are completely dedicated to guiding our clients through the audit experience with ease and understanding. If we are not in your area, look for a firm that speaks to your core values.
How do I prepare for a nonprofit audit?
One of the first steps you’ll need to take when preparing for a nonprofit audit is collecting all of the necessary documents. Your auditor can help you through this process, and will provide you a list of everything they need.
You should also prepare any relevant team members internally for the audit process. It’s a good idea to have an internal meeting specifically to discuss the audit and prepare your team for the next steps. Again, a good auditor can help walk you through the process and will let you know what to expect. For example, you’ll want to prepare your team for any fieldwork the auditor will be conducting to ensure a smooth process for everyone involved.
What should we do with audit reports?
At the end of the auditing process, you’ll be given a full audit report. This is a great time to have another internal meeting to discuss what you’ve learned in the process and any insights you can gain from the audit report.
As mentioned before, you can also publish your audit publically and make it available to potential donors of your nonprofit. Donors love transparency, and making this information public can go a long way in building trust.
Does your nonprofit need a trusted audit professional? Contact us today
to discuss your unique business needs and how we can help.