Audits have a history of causing negative feelings in businesspeople. It is not necessarily that getting audited is a bad thing, it has numerous positive results. Audits help with the nonprofit’s transparency and trust with the staff. Also, it adds credibility with the public since nonprofits are constantly monitored more closely than businesses.
Tips for Self-auditing
Nonprofits need to be ready for their accounting audits annually to have a pleasant time during the whole process. A few tips can assist any organization in feeling prepared for an independent audit without much worry.
Meet Federal and State Audit Laws
It is crucial to make sure all laws have been observed before undergoing an audit. However, some nonprofit firms don’t need to have an independent audit. Some are required by law because of their annual budget or source of funding. It helps to be aware of the rules and regulations concerning your organization.
Before an audit, the audit team should hold a pre-audit meeting to ensure they have everything needed. Necessary documents such as payroll taxes reports, a list of grants pending or received, and bank statements should be available. The pre-audit meeting also helps the audit team and auditor to collect specific documents needed for the nonprofit audit.
Prepare the Audits Field of Work
Most auditors need to observe where all financial operations take place. Having a contact person organize the logistics can be beneficial. Where the auditor will sit working or internet access involves getting your organization ready for an auditor. The primary goal is to make the auditor’s visit as comfortable as possible.
Being organized during the nonprofit accounting audits saves organizations a lot of time and money. Without being properly managed, there can be gaps discovered that may cost money to repair. To avoid unnecessary panic, use the pre-audit meetings to get everything in order. It is vital to emphasize maintaining realistic expectations concerning the audits.
Having a clearly outlined list of audit responsibilities between the nonprofit and the auditing firm helps maintain a good relationship. Communication among staff members is also essential to assist in collecting relevant documents. When the communication suffers, some papers may be challenging to retrieve.