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Your nonprofit organization may be required to hire an independent outside CPA to audit its books, depending on its annual gross receipts and other factors. Even when external audits aren\u2019t mandated, however, they\u2019re often recommended. These audits can provide assurance to donors and other stakeholders that your organization is operating with integrity and within acceptable accounting guidelines.<\/p>\n
Internal audits<\/strong><\/p>\n Most nonprofits conduct internal<\/em> audits on a regular basis, perhaps quarterly or annually. These audits are typically performed by a board member or a member of the organization\u2019s staff. The objective is to review the organization\u2019s financial statements, accounting policies and spending habits.<\/p>\n Internal audits promote fiscal responsibility and are essential to good governance. But they\u2019re often conducted by people who don\u2019t have extensive audit training and who have a vested interest in issuing a clean bill of health.<\/p>\n External audits<\/strong><\/p>\n Outside auditors may be in a better position to determine whether your statements offer a fair picture of your finances. In an external<\/em> audit, a CPA examines your organization\u2019s financial statements and issues an opinion on whether those statements adhere to Generally Accepted Accounting Principles (GAAP) or another reporting framework.<\/p>\n To support this opinion, the auditor tests underlying records such as your nonprofit\u2019s bank reconciliations, accounts payable records and contribution classifications. The auditor also evaluates your organization\u2019s internal controls, including procedures for fraud prevention and detection.<\/p>\n This type of audit is completely separate from an internal audit. Though external audits are optional for nonprofits in some states, they\u2019re required in others. Be sure you learn the rules that apply to your organization.<\/p>\n Preparing for the audit<\/strong><\/p>\n You can facilitate external audit fieldwork by anticipating information requests and inquiries from your auditor. He or she will ask for various financial documents, including:<\/p>\n Your auditor also may ask to review records related to loans, leases, grants, donations and fundraising activities. In addition, be ready to answer questions about such issues as how money and other resources are received and spent, what the organization does to comply with applicable laws, and how financial transactions are recorded.<\/p>\n We can help<\/p>\n Internal audits are essential. But they\u2019re no substitute for an external audit by a qualified CPA, especially in light of the major changes to GAAP in recent years and increasing government scrutiny of nonprofits. Contact us to discuss whether you\u2019re required to obtain an external audit under state or federal guidelines. Even if your organization isn\u2019t required to submit CPA-audited statements, you\u2019re sure to benefit from the expertise of an independent financial professional.<\/p>\n \u00a9 2020<\/em><\/p>\n <\/body> Your nonprofit organization may be required to hire an independent outside CPA to audit its books, depending on its annual gross receipts and other factors. Even when external audits aren\u2019t mandated, however, they\u2019re often recommended. These audits can provide assurance to donors and other stakeholders that your organization is operating with integrity and within acceptable […]<\/p>\n","protected":false},"author":3,"featured_media":14825,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[27],"class_list":["post-14826","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-aa"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/14826","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=14826"}],"version-history":[{"count":0,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/14826\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=14826"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=14826"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=14826"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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