Nonprofit Independent Audit
Your nonprofit organization can enhance its reputation for transparency, accountability, and ethics by having a regular independent audit conducted and making it available to the public. In addition, federal or state government may require audited financial statements.
State laws regulating independent audits vary from state-by-state. Click here to access a state by state guide.
There are instances when an audit might be too expensive or not required of smaller nonprofits. In such cases, reviewed financial services or a compiled financial services might suffice.
What You Can Expect From Us
An audit is the highest level of assurance Urich CPA performs for nonprofit organizations. It is intended to provide high-level assurances of the accuracy of financial statements. In other words, we perform an audit to obtain reasonable assurance about whether your nonprofit’s financial statements are free from material misstatement.
We follow Generally Accepted Auditing Standards (GAAS) guidelines which stipulate we perform a systematic review of your nonprofit’s transactions, internal controls, and assess fraud risk.
It also requires that we corroborate the amounts and disclosures included in the financial statements obtaining audit evidence by asking questions, performing a physical inspection, observing operations, confirmation by third-parties, and other procedures.
Nonprofit Independent Audit Frequently Asked Questions
1What is an independent audit of a nonprofit?
An independent audit of a nonprofit is an audit carried out by a certified public accountant who examines the financial records and business transactions of a nonprofit organization with which the CPA is not affiliated.
2Is my nonprofit organization required to conduct an audit?
- 26 States require nonprofits to submit a copy of their audited financial statements with their charitable registration.
- A couple of states require nonprofits that receive state funding to conduct an independent audit.
- State government contracts may require an audit.
- If your nonprofit spends at least $750,000 per annum of federal grants, it may be required to conduct a single audit previously known as OMB Circular A-133 audit.
- Private foundations may be required to conduct an independent audit if they receive grants from the state.
- Donors or financial institutions may also require audited financial statements before donating or lending to your nonprofit organization.
3What is the difference between a nonprofit audit and a for-profit audit?
The only difference is that the Board of Directors of a nonprofit organization has oversight responsibility, whereas, in some for-profit businesses, there may not have a board of directors.
4How do go about finding a qualified auditor for your nonprofit?
First, make sure that whatever CPA firm you hire has experience in the nonprofit sector. Then contact your state association of CPAs and the CPA Licensing Board in your state to make sure the CPA firm is licensed.
5Do federal grantees need to have an audit?
If your nonprofit organization spends over $750,000 in a single fiscal year of federal grants, you are required to follow federal audit requirements. Failure to follow the law could result in fines and difficulties obtaining future federal funds.
6What is a nonprofit audit committee?
A nonprofit audit committee is a task force appointed by a nonprofit’s board of directors to oversee an independent audit of the nonprofit organization. The nonprofit audit committee's primary responsibility is to hire and evaluate an independent auditor. It is worth noting that the nonprofit board retains oversight authority. At the behest of the board, the audit committee could also be charged with making sure the recommendations made by an auditor, are implemented.
7Who can serve in a nonprofit audit committee?
Ideally, an audit committee has to be as independent as possible to ensure that the audit process is objective. Audit committee appointees should not be involved in the nonprofit’s daily accounting functions.
8Should all nonprofits have an audit committee?
The simple answer is no. The goal of a nonprofit audit is to demonstrate financial integrity. As long as your nonprofit auditor is independent and experienced an audit committee is not warranted.