Most nonprofit organizations require an annual audit by a CPA. Smaller organizations can get by with what is called a review – or an “audit light.” For personnel who work in the accounting department, it’s too often anxiety time.
Relax, if you are routinely generating financial statements that are accurate, timely, and relevant to the various stakeholders, an audit can be an event to look forward to. It will affirm your worthiness and set-up high-fives all around. If, as a nonprofit, your financial reporting falls short of five stars (i.e., a clean audit), don’t despair; you will know what must be done to get there next year.
Tips to ensure a smooth audit for your nonprofit
Understand the purpose of your nonprofit’s audit
A nonprofit audit is designed to ensure financial reports are “reasonably accurate” while presenting the information in agreement with Generally Accepted Accounting Principles (GAAP). Here are a few things to keep in mind.
First, auditors only review the financial statements that you create internally. They conduct various tests and confirmations to reach an opinion on their fairness and accuracy. [Read more…]