Planning for your audit
Delegated finance staff, or an organization’s internal audit committee, takes on the primary responsibility of overseeing the audit process from planning to the final report. Key pre-audit responsibilities include:
Auditor Selection Organizations should look for an auditor or CPA firm that has expertise and knowledge of nonprofit accounting and tax-exempt charitable organizations. It is essential for an organization to locate and select a CPA or audit firm with the skills and experience to properly support not only your audit process but your organization’s overall needs and strategic objectives.
Audit Preparation The auditor engagement letter, or proposal for audit work and services, will outline what supporting schedules and documentation will be needed. Finance staff or audit committee members should expect to gather all financials and process or procedure documentation, prepare supporting schedules for all gathered financials, and organize statements and documentation so they are ready to hand over.
Here, the actual audit is performed by your auditor. During this time additional requests for documentation and questions to staff members can be expected.
A draft audit report may be provided, allowing for the Finance staff or the internal audit committee to ask questions about the auditors’ findings and review auditor recommendations. A final report will be presented to the board of directors and any recommendations for improvements or issues will be identified.
Issues that auditors may identify in the final report most commonly fall into two categories:
Material Internal Control Issues Weaknesses in processes, systems, and procedures that put the organization at risk for errors, issues, and irregularities
Operating Inefficiencies Inefficient or unnecessary operating procedures may be identified with proposed improvements to help strengthen operations. This may often include recommendations for new technologies that improve overall financial management and financial operations of the organization.