For instance, some separate state or federal agencies may require an audit from your nonprofit depending on your size or spending habits. Or grant organizations may require one to prove your financial responsibility before providing funding. This article will discuss financial statement audits for nonprofit organizations. We won’t deal with other types of nonprofit audits, like compliance audits or governmental audits, which can differ in certain respects. Once these discrepancies or risks have been identified, auditors will then provide their recommendations for addressing them in order to ensure that future operations are compliant with reporting standards.
Compliance audits investigate your organization’s obedience to federal, state, and local laws. It’s less of a financial audit (though, it normally includes that to some extent) and more of a check on compliance requirements and adherence to established bylaws. This means you have more control over when, where, and how you conduct independent audits. Sometimes state and federal laws require you to audit your nonprofit, but that’s not always the case. And even if you don’t have a legal obligation to conduct an audit, a financial examination can still be a huge boost for your organization. Typically, a nonprofit independent audit refers to an examination of financial records, accounts, transactions, and internal controls by an independent auditor.
What a Difference Preparation Makes: A Guide to the Nonprofit Audit
Don’t have a legal obligation to audit your nonprofit? While that’s fine, you still might want to consider doing one. Audits provide benefits far beyond compliance and checkboxes.
Here at Jitasa, we file our clients’ Form 990s after they’ve completed their financial audit. Nonprofit Form 1099 Guide – Your organization needs to issue 1099s to any contractors you work with at the beginning of each year. Learn more about how and when to issue these tax forms. https://www.bookstime.com/articles/nonprofit-audit Take the next step and reach out to us at JFW Accounting Services. Schedule a consultation and let us help you navigate the complexities of financial management, strategic planning, and compliance. Also make sure to give yourself enough time to get everything together.
What Are Independent Nonprofit Audits?
Your audit responsibilities should be clearly listed in your engagement letter with the auditing firm. Knowing what is expected of you – and going forward – can help you set realistic audit expectations. Whether your organization is obligated to obtain an audit or not, there are many positives that will help your nonprofit as it moves forward.
All in all, remember that while an audit process is involved–and can be intensive–the purpose is for greater financial transparency and effectiveness for NFP organizations. By being prepared, communicative, and collaborative, you and your staff can create a smoother and more efficient audit process. If you have questions about NFP audits or the auditing process, fill out the form below to contact the author and expert Bobby LaCour, CPA, or reach out to your Nonprofit Aldrich Advisor. The unique circumstances of the last two years may bring some special considerations to the audit process. Auditors may wish to examine operations in the current fiscal year and disrupted operations in the prior fiscal year. There may also be a particular emphasis on auditing more varied funding sources in the current year.
The auditor may suggest ways to cut costs or recommend changing certain internal controls. An NFP organization may be audited for a variety of reasons. The IRS may select an NFP for a tax audit, conducted as a field audit or a correspondence audit.
Your message has been received and we’ll be reviewing your request shortly. In the meantime, schedule a meeting with us and we’ll be in touch soon. The audit firm will come in to review your final end-of-year numbers and all the documentation they need to complete your audit. The audit firm will do preliminary testing, familiarize yourself with your organization and ask for additional documentation. A dedicated Jitasa accountant will help you prepare and even refer you to an auditor.