Unlike an audit, the CPA does not express an opinion as to whether your financial statements are in accordance with GAAP. Instead, the accountant merely states whether he or she is aware of any material modifications that should be made to the financial statements for them to be in conformity with GAAP. Many funders will accept a review instead of an audit, but a review is not an audit and it may not be referred to as such. For small to medium non-profit organizations, navigating the world of financial audits can be daunting.

An audit committee is either a task force or a standing committee that has been given authority by the board of directors to provide accountability for the nonprofit’s independent audit. While the full board retains oversight authority, the audit committee’s smaller size allows audit guide for small nonprofit organizations it to carry out its responsibilities in a more manageable environment. The committee is not involved in the nonprofit’s daily accounting functions, but instead oversees the independent audit process which often entails hiring and evaluating the independent auditor(s).

The 4 Benefits of Nonprofit Auditing

The primary purpose of the auditing committee is to find an independent auditor. You must start working with an auditor early enough to meet external and internal deadlines. It’s recommended that you find and begin working with the auditor 4 to 12 weeks before the deadline. An auditing committee is optional if you have a finance committee, but it may help your organization keep up to date with internal and external audit requirements. Nonprofits may be surprised when they realize that the request for a nonprofit audit may come from many sources. In addition to the IRS, there are a number of different organizations and the state government too can expect audit results from your nonprofit.

One or a group of IRS agents show up to your organization and begin to file through your financial paperwork. Cynder Sinclair is an impactful and dynamic presenter, and has effectively facilitated several groups that I have participated in. Her Board Leadership retreat provided a charged yet unifying platform to develop a strategic plan for our organization, and yielded valuable benefits for the entire board. — Dr. Cynder Sinclair is a consultant to nonprofits and founder and CEO of Nonprofit Kinect. She has been successfully leading nonprofits for 30 years and holds a doctorate in organizational management.

Audit vs Review vs Compilation

Independent audits serve a number of crucial functions for non-profit organizations. They assure donors, board members and other stakeholders that the organization practices transparency and financial responsibility. Additionally, independent audits can help identify areas for improvement, inefficiencies or potential fraud, allowing the organization to address these issues proactively. We also have 6 former nonprofit auditors on staff, so our team is trained to prepare your financial reports precisely how an auditor wants to see them.

Nonprofits who successfully communicate their impact and use analytics to target new funders, can improve their financial resilience into the new year. Also, the federal Office of Management and Budget says that if your nonprofit spends $500,000 or more in federal funds in a year, you’ll have to get a single audit. Donorbox is an all-in-one online fundraising platform for nonprofits of all sizes. Our simple-to-use and powerful features range from Donation Forms and Fundraising Pages to Recurring Donations, Crowdfunding, Peer-to-Peer, Events, Memberships, and more.

Roles and Responsibilities of Nonprofit Audit Committee Members

Ask your network for recommendations if you don’t know a firm and try to get someone lined up at least 6 months in advance. That’s why our in-house team of 6 former nonprofit auditors helped put together this guide to nonprofit audit checklist to make sure  your audit goes as smoothly as possible. Audits can also be helpful in identifying areas where your organization can improve its financial practices.