Most nonprofit organizations must have their financial statements audited on an annual basis. Conducting an independent audit is required to ensure that an organization’s internally prepared financial statements present fairly, in all material respects, the financial position and results of the organization. An annual audit can serve as a quality and competency check on the accounting function as well as provide insight to a nonprofit’s executive leadership and board.
In addition to compliance, having your nonprofit audited can provide additional benefits:
- An audit can help gain the trust and confidence of potential funders and granting organizations. Some granting organizations may require audits from nonprofits before they will approve grants and/or donations. By going through an audit, a nonprofit can potentially access more funding resources and organizations.
- An audit can help maintain strong relationships with existing donors by demonstrating that the organization is committed to financial accountability, transparency and best practices.
- An audit can provide proof that the organization’s financial statements are compliant with current accounting standards and requirements. An audit is carried out by an independent, third-party public accounting firm whose duty is ultimately to the public and not the organization being audited.
In addition, nonprofits may be required to have their financial statements audited if they:
- Apply for fundraising because audited financial statements are a requirement in some states.
- Spend more than $750,000 or more of federal/state funds per year.
- Are requested by federal, state or local officials for a copy of their audited statements.
- Have a contract with the state or local governments that requires providing services.
- Apply to a foundation for funding to satisfy an organization’s request to prove eligibility before becoming a donor.
Being prepared for an audit is a challenge for most nonprofits that can be both short on internal resources and the necessary expertise and experience to undergo an audit successfully and efficiently. Consultance Accounting has helped many nonprofit organizations prepare for and undergo their annual audit. Almost all of our nonprofit clients, regardless of size, are audited, annually.
Our team goes through dozens of audits each year with our client base. We provide the guidance, leadership, and support to help your nonprofit navigate an annual audit. Whether we are engaged to perform your monthly accounting and financial management or are engaged just to help prepare for your annual audit, Consultance is an essential part of your team to help navigate what can be a challenge, maybe even a nightmare, for most smaller organizations.
If you have questions about preparing for a first-time audit or your annual audit, please reach out to us to book a discovery call.