How to Request a Nonprofit Audit CPA Insights

In this article, we’ll discuss different types of audits, the benefits to your nonprofit, and the steps you’ll need to take. We’ve also included a free nonprofit audit checklist to keep you on track. A Accounts Payable Management recent program that the IRS conducted with universities confirmed the need to expand efforts in this area. At the close of the first audit and Form 990 if applicable, provide feedback to the accounting team on what went well and what could be better for the next audit or tax form. Send your RFP to the firms you’re considering working with well in advance of when you aim to begin the audit.

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If your nonprofit does not meet any of the criteria above, an audit is likely not required unless your state has different criteria. However, you may still choose to have one conducted on a voluntary basis. Some of these actions may be simple improvements that add up to make a significant difference in your operations, while others may be more complex changes that will take time and effort to implement. Although you’ll need to put in effort to prepare beforehand and apply the auditor’s recommendations afterward, the benefits of financial auditing typically outweigh these costs.

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We recommend having someone review it who’s knowledgeable of your organization’s financial processes and requirements before you send it to accounting firms. This will help ensure that terminology is correct, your scope of services is accurate and that you are asking for the correct level of assurance (audit vs review). At the same time, many large donors, foundations, or other sources of funds may request or require audited financial statements. These statements help them have confidence in the reported financial health of the organization.

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Some organizations can opt for a less expensive financial statement review. Talk with your banker or a trusted nonprofit auditor to clarify what level of assurance your organization needs. There is no set timeframe for how often a nonprofit should have an audit if not required by law or contract. However, most organizations choose to have a financial audit conducted every year once they reach a point of needing one. In addition, the auditor’s understanding of the organization’s industry and the regulatory environment in which it operates affects the time CARES Act required to complete the audit.

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This is because the auditor will examine transactions and activities to ensure they are in compliance with these laws and Generally Accepted Accounting Principals (GAAP) rules. Additionally, the Guide includes information about special audit requirements that apply to nonprofits that receive funding from the federal government. While nonprofit audit reports are not automatically made public, many organizations choose to publish them to demonstrate transparency and foster trust. For nonprofits seeking funding, having an accessible audit report can be crucial.

Compliance audits are conducted by government agencies or third-party organizations to ensure that the nonprofit is complying with all applicable laws and regulations. Based on the results of these tests, the auditor will give an opinion on the organization’s financial statements. This means that the auditor will examine the financial statements and check for any errors or omissions. The nonprofit audit is the best way to ensure compliance with laws and regulations that govern nonprofits.

• Previously, areas of non-compliance concerning control of overseas expenditures, reporting of foreign bank accounts, and inadequate record keeping have been found.
• If applicable, mention the requirement for a Single Audit under the Uniform Guidance if your organization receives federal funds.
• At NPact, we understand the importance of financial transparency, compliance, and accountability for non-profits and community foundations.
• Smith & Howard Advisory, LLC and its subsidiary entities are not licensed CPA firms.
• Instead, we encourage you to focus on evaluating each auditor’s client references, experience and communication skills.
• There are many misconceptions about audits, and the process can be challenging to understand at first.

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Too often, RFPs are copied and pasted from another organization, then sent to audit firms. Make sure your RFP is well organized, specific to what you need and free of redundancy. Knowing exactly what you are looking for will make reviewing proposals and interviewing prospective audit firms more productive and meaningful when you get to that point. At NPact, we understand the importance of financial transparency, compliance, and accountability for non-profits and community how to request an audit of a nonprofit foundations. Year-end audits are a crucial part of this process, ensuring that your organization remains in good standing and maintains the trust of its donors and stakeholders. We’ve compiled a comprehensive non-profit audit checklist to help guide you through streamlining the process.

• This date often hinges on the date of the board meeting at which the audit firm formally presents the audited financial statements to board members.
• Organizations are selected for reviews for a variety of reasons, and the scope of the audit or compliance check will vary based on the type of review.
• Simply reach out today to request an RFP template or learn more about our accounting, audit and tax services for nonprofit organizations.
• The charges also depend on the range of services required by the nonprofit.
• You want some details about their offerings and the manner in which they submit audited financial statements.
• Provide contact details for any inquiries related to the RFP, such as a contact name, phone number and email address.

However, they also focus on unusually low compensation amounts reported in relation to the size of the organization. In this scenario, the IRS may be concerned regarding a lack of reporting transparency and may decide to open an audit. The leaders and board members of your nonprofit are heavily invested in the success of the organization. Just as we shared what to include in your nonprofit audit RFP, let’s look at some items you can forgo. These items, quite frankly, generally don’t add meaningful information to the proposals you receive. You might also want to ask the audit firms about their capacity to conduct remote audits if that’s something you wish to consider.

Some of these reasons come from external sources, but regular audits can also be an excellent long-term practice for your organization. CRI’s non-profit advisors can work with your organization to ensure compliance in common audit trigger areas. If your organization is selected for an audit, we can help navigate the process and make it as pain-free as possible. Currently, the IRS is focusing significantly on large foreign grant activities. Their concern is that money sent overseas could be diverted away from charitable purposes.