Nonprofit Audit – Page 3

Helping your Nonprofit Board of Directors to be Successful

Being a successful nonprofit organization has never been an easy task. Unfortunately, it is more difficult than ever to be a successful nonprofit thanks to the quick pace of changes in our modern world, higher stakes than ever before, rapid technological advances, added pressures to keep up with all of the venues being used to get the word out, and many other facets. To find success, much is required on the part of the organization. To learn more about four keys to success for nonprofits, visit here.

When it comes to your board of directors, the challenges they face are no different. The modern board faces constantly evolving challenges with multiple issues competing for its attention in a limited period of time. With so many factors influencing nonprofits and such limited time for boards to meet, how can you help your board maximize the use of their board meeting time?

Structuring Board Meetings: Have a Central Focus

As directors of your nonprofit, it all begins with careful planning of the agenda to secure adequate time for the issues you most want to focus on. As we’ve discussed over the past few weeks, if you don’t know what to focus on at your nonprofit, this can be costly and detrimental to success. If it is unclear where to put emphasis and energy, you will likely need to change your focus from day-to-day operations to people and your mission in order to ensure success. Be sure your priorities, goals, and focus are defined and prioritized first and foremost. Once you know what to focus on during the meeting, start it with the strategic issues of priority for that year, ensuring there is time for quality discussion. Routine matters can be slotted in later.

Ways to Engage the Board of Directors during Meetings and Other Venues of Involvement

In addition to the idea of using traditional board meeting discussions and forums during board meetings, site visits and specialized briefings help to draw all the key strands of the agenda together to support strategic decision-making and gain a better understanding of what goes on at the organization. After these visits and briefings, a next step is to look at trends, call out the impact of technology, and use this body of evidence to influence and inform where the organization anticipates and desires to go moving forward. However, it is also important to provide an opportunity for unstructured discussion– a free flow of information with you as the chief executive or director before the demands of the agenda take over. This also provides an opportunity to hear about and benefit from board members’ wide-ranging experience and expertise.

As Beck and Company Certified Public Accountants and Business Advisors, we understand all that goes into being successful as a nonprofit and how much work goes into being intentional in helping your board members along this same path. For this reason, we are here to help. You can allow yourself to focus on your mission and being the liaison between the organization and board if you have less to focus on in terms of the financial side of daily operations. We would be happy to assist you with your auditing, accounting, and overall financial needs. Visit here for more information on the variety of nonprofit services we offer including CFO, controllership, and accounting services.

Contact us here at Beck and Company CPAs so we can equip you as nonprofit directors to equip your board of directors while easing the burdens of financial responsibilities by helping with them. We look forward to being part of your success as a nonprofit!

4 Keys to Being a Truly Successful Nonprofit

It is often the case that mainstream businesses are a bit “ahead of the times” of what most nonprofits are doing. High-performing companies are not just sitting on the sideline in order to get ahead of the curve. Instead, they are actively implementing innovative processes and honing their focus to get ahead. These companies are increasing revenue, growing in profits, raising market shares, and improving customer satisfaction. Although the desired outcomes are a little different for nonprofits, the desire to achieve success in goals is no different between mainstream businesses and nonprofit organizations. By implementing some of the same practices these successful companies are using at your nonprofit, you can help your organization to not only get out of its own ruts but be a leader and innovator among nonprofits. In turn, you can have the level of success in achieving your mission and goals that many large and successful businesses are having in achieving their desired profits.

It all starts by putting your focus in the right place. When it comes to businesses, they have found that there is connection between strong customer and employee engagement. A genuine customer focus is needed in order for businesses to thrive. This is no different for nonprofits. There needs to be a focus on nonprofit constituents and staff members instead of just day-to-day operations. To evaluate where your organization lies in putting your focus on the people and fulfilling commitments made to them, visit here.

If the focus of your organization, just like high-performing businesses that focus on customers and employees, is on the mission/constituents and staff, you are on the right track. Now, let’s take a closer look at four key areas that will help you, along with the right focus, to be truly successful as a nonprofit that are based on keys to success found amongst successful mainstream businesses.

4 Keys to being a Truly Successful Nonprofit

Right priorities start from the top but run deep. The behaviors of nonprofit leaders and board members support a focus on nonprofit constituents and the mission in high-performing nonprofits, and the practice is drilled down to include the behaviors of staff members, too. Success stems from supporting the execution of constituent- and mission-focused strategies. Leadership involvement includes crafting a formal strategy (such as a solid mission and action steps to meet it), setting clear goals, and aligning internal systems and processes with the needs that need to be met.
Focus beyond just constituent satisfaction to extend to customer advocacy. Satisfaction is the global standard for measuring a focus on customers for businesses and constituents for nonprofits. But, high performers across the spectrum recognize that active engagement is essential. Feedback and referrals are both important. In addition, advocating for constituents as a whole instead of simply meeting a need or two is essential.
The focus of the nonprofit should be driven, at least in part, by data. In the age of Big Data and evidence-based business activity, high-performance companies use customer insights, shared organization-wide, to shape products, services, and strategy. This should not be any different for nonprofits. Are you regularly collecting and actively using data to help meet your mission and goals?
Connect with constituents in as many ways as you can, including the use of technology. Are you putting technology to good use to better make connections with everyone from donors to those who receive the services offered by your nonprofit? This can include social media venues and technology offerings meant to track interactions plus marketing initiatives. These connections should encompass sharing stories and service offerings, soliciting feedback, listening to and acting on feedback, and promoting participation.

Beck and Company Certified Public Accountants and Business Advisors know that being a truly successful nonprofit, just like a successful business, is no easy task. That is why we are here to help. With so much focus needed on prioritizing, keeping people satisfied, advocating for constituents, using data to enhance success, and connecting well with those involved, it is hard to also need to focus time and energy on the financial side of operations. Leave this part to us so you can focus on the others areas that will help you be successful. We can help with a large variety of financial services that are tailored to nonprofit needs. For more information on all of our nonprofit services, visit here.

Beck and Company CPAs would be happy to help you achieve your nonprofit goals by helping with your financial practices and carrying out audits, etc. Contact us to learn more.

Setting your Nonprofit Organization Apart: Where Do Your Commitments Lie?

It is undeniable that you want your nonprofit organization to be as successful as possible, but do you really know what that takes? It can be easy, almost too easy, to simply do what has always been done at your organization instead of trying to be the best you can be and set yourselves apart from the pack. Too often, nonprofits do what they have always done instead of being innovative leaders themselves. Don’t let the success of your organization be robbed by a lack of initiative and best practices to simply maintain what has always been done and what is comfortable.

If you agree that you want to be as successful as possible as a nonprofit, that some things will need to be developed instead of staying the same in order to get there, and that you want to separate yourselves from the identity of “surviving” with acceptable practices to “thriving,” how do you do this? It starts by having a true focus on so much more than just day-to-day operations and tasks. It stems from a focus on people.

Developing the Right Focus on People instead of Operations

Let’s take it a step further and consider if your organization really does even focus at all beyond the day-to-day operations. Should your focus just be on routines and practices or should there be more of a focus on the people? Have you considered the people you are trying to reach and the people trying to make this outreach possible by working for your organization? This is an important starting point to evaluate your priorities and where your focus actually lies. It takes being focused on your mission and its constituents and helping your staff to be successful in these efforts.

If the focus of your organization should be on the mission/constituents and staff, you need to evaluate how they currently are being reached and how they are feeling. Let’s take a closer look at how to evaluate this by using some reflection questions you can ask yourself. The reality is that these questions should highlight if you are keeping your commitments to these groups because keeping commitments is essential to success.

Questions to ask yourself regarding those you are trying to reach based on your mission (your nonprofit constituents):

Are we meeting the needs we said we would meet or failing to provide what was promised?
Are constituents satisfied or disgruntled?
Does our mission come across to our constituents in how we act upon it or not?
Do constituents feel comfortable interacting with staff members and that their needs are being understood and responded to?

Questions to ask yourself regarding your organization’s staff:

Are we keeping promises made to our staff?
Are staff members feeling like they are being taken for granted, or are they appreciated?
Are staff needs being met by the organization to the point that they can truly focus on meeting the needs of others—of the nonprofit constituents being served?
Are staff members treating constituents well?
Are staff members bought in to the mission?
Are staff members equipped with the resources and training they need or not?

As Beck and Company Certified Public Accountants and Business Advisors, we realize just how much goes into being successful as a nonprofit. This is so much more than just day-to-day operations but requires pouring time, energy, and resources into the people serving and being served by the nonprofit. That is why we are here to help. You can allow yourself to focus on your mission and the important people involved with your nonprofit more if you have less to focus on in terms of the financial side of daily operations. We would be happy to assist you with your auditing, accounting, and overall financial needs. For more information on the variety of nonprofit services we offer including CFO, controllership, and accounting services, visit here.

Contact Beck and Company CPAs to find out more about helping your nonprofit to be successful and how we can help you achieve this by meeting your auditing and accounting needs.

Nonprofit Financial Transparency Actions that Reduce the Risk of Fraud

All of us want to trust those we work with and that they share our beliefs about ethical practices. Unfortunately, this is not the case all the time. Fraud is a real risk for nonprofit organizations. Fraud can have a serious impact on your organization’s reputation, future receipt of donations, stakeholder trust, and more. It is essential that you safeguard your organization from fraudulent activity. One more important area impacted by fraud are the financial facets of your organization. This can truly be costly. We will take a closer look at financial safeguards and actions you can take to reduce the risk of fraud at your nonprofit in the area of finances. For other actions you can take to safeguard your nonprofit in the area of the board of directors from possible fraud, visit here. Those tips will help you be aware of four conditions that promote fraud and tips for avoiding it as a board.

Beck and Company’s Certified Public Accountants and Business Advisors can help with important aspects of safeguarding finances and financial transactions within your nonprofit and take the importance of this very seriously. Fraudulent activity can be costly, damaging, and ultimately destructive to organizations and their important work. That’s why we offer nonprofit financial audits to help you help your organization be very knowledgeable about the financial practices that are occurring within your nonprofit. This knowledge can be used to help you be more actively involved in upholding and maintaining effective financial reporting to prevent fraud. We can conduct internal financial audits and provide you with the facts you need to stay current on financial dealings and not allow fraud to creep into areas that are not being monitored but should be. Learn more about our auditing services here.

Financial Facets that need to be Safeguarded and Tips to Prevent Fraud

Checking and Banking accounts
Keep blank checks locked in a secure location and restrict access to them
On a monthly basis, have staff outside of the disbursement initiation, approval, and check-signing functions that are at the senior level obtain unopened bank statements and review cancelled checks and statements
Implement an independent review (here at Beck and Company CPAs, we can do this for you) of monthly bank reconciliations and related journal entries
Record all new accounts and closed accounts in finance committee minutes
Learn what fraud prevention services may be offered through your banking institution
Revenue and receipting
Use dual control where more than one person is receiving and counting receipts in addition to check and cash contributions
Require all grant notifications to be reported to the finance department
Reconcile earned revenue (such as student enrollment numbers or tickets sold) with statistics outside of the finance department
Disbursements
Compare vendor addresses and employee addresses periodically to ensure there is no crossover
Detect kickback schemes by performing independent price checks of payroll taxes withheld against amounts actually paid
Require two live signatures for every check and wire transfer that is of significant value (determine that amount as a group)
Reporting
Set reasonable spending limits on company credit cards and purchasing cards
Require finance department reviews of periodic reporting on all grants to ensure effective financial reporting is in place
Require reporting on monthly balance sheets and income statements
Expense reporting
Formulate and strictly enforce credit card expenditure documentation
Have a nonprofit financial audit committee member review CFO and CEO expense reports for true financial transparency in the organization from top to bottom

Financial transparency is so important to reducing the risk of fraud. Beck and Company CPAs are here to assist you with any area within the financial realm that you may need expert help in for everything from establishing more effective financial reporting systems to conducting nonprofit financial audits that can reveal anything that needs a closer look in order to be safeguarded from fraud. Please contact us for information and help in these areas.

Preventing Nonprofit Fraudulent Activity within the Board of Directors

Implementing systems and actions meant to help your nonprofit organization prevent and eliminate fraud are essential to its ongoing financial and organizational health. Last week, we took a look at six important facts you should know about fraud that will help you take actions against it and implement effective financial reporting in the process. Click here to learn more. Beck and Company’s Certified Public Accountants and Business Advisors have also shared some tips and steps for preventing fraud in the past that are an important starting point in fraud prevention. Today, we will look at some additional actions you can take to further reduce fraud risks to your organization through actions needed within the board of directors. View the other prevention tips as a starting point, and then keep reading for additional tips and help.

Beck and Company CPAs offer auditing services to carry out nonprofit financial audits at your organization that can provide you with an extensive examination of financial information. These audits will give you a closer look at possible areas of fraud within your organization so that you can be intentional in dealing with them. We would be more than happy to help your organization in this way so you can help your organization maintain its wellbeing and prevent abuse.

Four Conditions that Promote Fraud:

Before we look at additional tips for preventing fraud, it is important to note the four factors or conditions that, when present in your organization, lead to fraud occurring. Be sure you are aware of the existence of these conditions so you can stop them both within the organization and the board of directors. They are:

Incentive (personal, professional, and financial gains)
Opportunity (ineffective financial reporting or lack of reports that allow for easy access and actions with little or no knowledge being able to be tracked by others)
Rationalization (justification of need or ability to commit abusive or fraudulent act)
Capability (in a position of trust and access to funds that make it easy to commit fraud)

Tips for Preventing Fraud within the Board of Directors at Nonprofits

Board members are not exempt from having the potential to commit fraud. In fact, they often have more access to information and funds in addition to being the most trusted within an organization. They can use this power and the above four conditions that are often most true of the board in order to take advantage of the nonprofit organization. Here are some tips to help ensure the board, too, is upholding financial transparency and acting with integrity even with more power and access available to them.

Institute a board member code of conduct and ethics policy
Create and use a conflict of interest policy and require all board members and senior staff alike to sign this disclosure statement on an annual basis
Require staff and board member background checks including for those in existing roles (especially finance staff and those in the most sensitive positions)
Establish a formal audit committee with a charter laying out specific duties and tasks. Beck and Company CPAs would be pleased to help you in this process and as the auditors.
Enforce a formulated gift acceptance policy for all gifts
Monitor performance throughout the year of internal control policies and procedures by requiring finance staff to report results of reviews of internal control processes and use effective financial reporting
Engage an independent accounting firm (such as Beck and Company CPAs) to evaluate controls as an agreed-upon procedure that occurs regularly

These board fraud prevention tips are only one area that needs fraud prevention. Stay tuned next week for tips that span across the financial domain of the organization. Beck and Company CPAs can help with nonprofit financial audits that will give you the financial transparency you need as an organization to prevent abuse within the board and nonprofit. Please contact us for assistance.

Implementing Effective Financial Reporting: Know the Facts about Fraud

Fraud is, in essence, criminal deception or wrongful action intentionally intended to result in personal and most often financial gain. Unfortunately, even nonprofit organizations are susceptible to fraudulent activity, and this can even occur within the organization internally through staff actions of finances that manipulate the truth of the financial reality or use it for personal instead of organizational use. Last week, we took a look at ways to prevent fraud, the many types of financial fraud that exist, and how financial transparency can help. To learn more about all of these important facets to understand in terms of fraud, visit here.

Beck and Company’s Certified Public Accountants and Business Advisors know how important it is for your organization to truly thrive and accomplish its mission. Fraudulent activity can be both damaging and ultimately destructive to organizations and their important work. That’s why we offer nonprofit financial audits to help you help your organization be very knowledgeable about the financial practices that are occurring within your nonprofit and so you can be educated and actively involved in upholding and maintaining effective financial reporting to prevent fraud. We can conduct internal financial audits and provide you with the facts you need to keep up on financial dealings and not allow fraud to creep into areas that are not being monitored but should be. Learn more about our auditing services here.

Facts about Fraud that Your Nonprofit Organization Needs to Keep in Mind:

Let’s take a closer look at some important facts about fraud that you need to know.

It likely already exists. Like it or not, there is a very high probability that fraud or financial abuse already exists somewhere within your organization. Accepting this but being active in not letting it spread farther is essential.
The cost of fraud goes far beyond dollars lost. The true and real cost of reported instances of organizational fraud or abuse cannot be measured in terms of just dollars lost. They must also be measured in terms of lost public and internal trust in the organization.
Changes to personnel and circumstances increase fraud risk. No organization is completely stagnant. As situations change and staff turnover or expansion takes place, new people and systems are involved all the time. These changes can increase the risk of internal fraud and abuse.
Internal controls alone are not enough to prevent fraud. Certainly internal controls play a key role in deterring fraud and abuse, but they only represent one facet of the many, including effective financial reporting and financial transparency, that are needed for fraud prevention and detection.
Everyone involved in the nonprofit must also be involved in fraud prevention. All constituents, staff, and board members have a role to play in preventing and detecting fraud and abuse. Everyone within an organization has a responsibility and duty to be active in noticing, reporting, and responding to fraud. No one should think they are exempt from this role.
Fraud’s intensity increases with the level of the organization. Typically, fraud from the top of the organization is much more major and far more costly. Even still, minor fraud can still occur and impact an organization at the lower levels of an organization even if they are less severe.

Keep these facts about fraud in mind, and share them with those in your organization. Use them as a starting point through which you create your action steps in preventing fraud. Beck and Company CPAs are here to help you by carrying out nonprofit financial audits and taking other steps needed to help your nonprofit increase financial transparency and decrease fraud. Please contact us for assistance.

Fraud Types and Financial Transparency’s Reduction of Them

Is your nonprofit at risk? Do you know if fraudulent activity is taking place within your organization? None of us want to become a statistic, but with the rampant and varied means by which fraud occurs, it can be easier than you realize to be susceptible to fraud. In today’s society, fraud is like a mask that covers up the truth and takes on many different forms and identities which makes it harder to identify and eliminate. No matter what, fraud is a destruction of trust, and it is so important to be aware of what is truly going on within your organization in order to prevent it. Because nonprofits are considered trustworthy by nature of the public good they intend to do, the damage in violating trust is even more severe for not-for-profit organizations.

Reducing Fraud’s Risk:

We all know and understand that abusing trust can be costly for nonprofits. Ultimately, it could be more than just costly for fraudulent activities to take place at an organization. It can actually completely destroy and terminate organizations that are not careful and vigilant in protecting their organization and doing all of the necessary steps to prevent fraud. Fraud can be prevented by using internal controls and internal audits in order to be detecting it quickly. It can also be stopped by educating the organization’s staff on the forms of fraud and actions that would constitute it in addition to its impact and how to report it if it is being noticed. Finally, fraud can be prevented through the board of director’s vigilance, policies, and financial supervision. To learn more about these three ways to prevent fraud, visit here.

Beck and Company’s Certified Public Accountants and Business Advisors offer auditing services that can provide you with an extensive examination of financial statements to give you a closer look at possible areas of fraud within your organization through a nonprofit financial audit so that you can be intentional in establishing and maintaining trust in those areas instead of harming it. These nonprofit financial audits are truly essential to maintaining the organization’s health, but they are not the sole means through which fraudulent activity can be discovered. Ongoing effective financial reporting and the use of these reports to continuously be sharing this information with constituents and board members to ensure financial transparency is essential.

The Types of Fraud and How Financial Transparency can Help:

Let’s take a closer look at the forms and faces fraud can take and how to unmask these fraudulent activities and prevent them with financial transparency and effective financial reporting. Nonprofit organizational fraud can take the form of:

Payroll or billing schemes
Check tampering
Unrecorded or understated funds
Mischaracterized or fictitious expenses
Undisclosed conflict of interest transactions
And many other forms as well

Clearly, many of the types of fraud stem directly to finances and financial practices within a nonprofit organization. Both intentional errors in use of funds and intentional errors in recording funds lead to fraud and trouble for nonprofits. Falsifying funds and financial records is so costly and damaging to organizations that it is important to be consistent, vigilant, responsible, and in tune to financial actions and transactions on an ongoing basis in order to uphold financial transparency. Effective financial reporting is key, and active involvement in financial dealings is essential to knowing what is going on within the financial side of the organization to prevent dishonest activities from having a chance to even occur let alone expand.

Beck and Company CPAs are passionate about helping nonprofits get their financial reporting in order so they reduce the risk of fraud. Learn more about all of the nonprofit services we offer in addition to the auditing services mentioned earlier. Contact us to let us know how we can help your organization with the financial services, internal audits, and other services to keep your finances in check and your organization “unmasked” to prevent fraud.

Transparency’s Potential for Positive Impact on your Nonprofit

When you think of all of the factors that influence your nonprofit’s success, does transparency come to mind? This may be a more subtle performance indicator than the others we have looked at over the last two weeks, but it is so important. The third “T” in our series about the “Four Ts” or four performance indicators that deserve a closer look as a nonprofit is transparency. Transparency is just one of the four indicators that has the potential to increase and produce greater success while positively impacting nonprofits. To learn more about the other “Ts” we have discussed, visit here to learn about technology and to take a closer look at how it impacts another indicator, transformation.

Is your organization accountable to its stakeholders and providing them with insight into how money is being spent, how decisions are being made, etc.? Does your organization allow its stakeholders and constituents to make informed decisions about the services provided and their quality? Many organizations fail to even view transparency as something that will better decision making. The reality is that this can be achieved if care is taken to present information in relevant and engaging ways instead of by simply replicating internal paperwork.

Beck and Company’s Certified Public Accountants and Business Advisors understand that having the relevant data and accurate information needed to be transparent can be tricky and difficult, especially in small organizations who may not have expertise in accounting and financial practices and are best skilled to focus on the important mission-related work of the nonprofit. Our expertise is in the financial area, and we can help you with your accounting and financial practices through our nonprofit services designed to meet the financial accounting needs of organizations. We also offer audit services to help you with yet another financial aspect of your organization that is essential to its health and transparency—nonprofit audits. Let’s take a closer look at what transparency is all about and how it is beneficial.

What is transparency, and why is it important to nonprofit success?

Transparency is so much more than sharing the latest budget or minutes from meetings. It involves identifying the right sets of data, identifying the appropriate financial and non-financial key performance indicators (KPIs), and acting upon that information to demonstrate how effective a nonprofit organization is at meeting the needs of those it serves. Metrics and measurements must also be clearly communicated to achieve transparency, and this information must be consistent and timely.

The beauty of transparency is the opportunity it creates for true openness. It has many benefits including helping in fostering a culture of collaboration and sharing within an organization and to its stakeholders. At the same time, transparency can increase trust and engagement through true accountability.

Here are five essential benefits of being transparent:

1. Increased engagement- conversations, decision making improvements, dialogue, etc.

2. Enhanced internal collaboration and true openness as a nonprofit staff

3. Improved trust in the organization on the part of its stakeholders

4. Enriched quality of delivered services

5. Heightened operational efficiency within the organization

Beck and Company CPAs can help you in the process of continually increasing transparency, particularly financial transparency, through a myriad of service offerings including accounting services, nonprofit services, audit services, and technology consultation services. Please contact us to let us know what your needs are and to find out how we can assist you in meeting those needs. Stay tuned for the conclusion of our series on indicators that can determine organizational success next week as we look at the last of the four “Ts” that can be strong indicators of nonprofit success—talent.

Making Sense of Nonprofit Audit Conclusions and Results

The nonprofit financial audit process is not complete with the preparation and actual audit alone. The conclusions that result from a nonprofit financial audit are some of the most important parts of the process for nonprofits and should not be overlooked. The auditor’s conclusions may be confusing, so let’s take a closer look at what they mean. It is important to note that understanding what the auditor was looking for and communicating well with the auditor can help in understanding the audit conclusions. To learn more about effectively communicating with your auditor and what the auditor will need from you to complete the audit, visit here.

Beck and Company’s Certified Public Accountants and Business Advisors are auditors themselves and can help you with the entire process. Learn more about our audit services by visiting here. We would consider it a privilege to be the auditor for your nonprofit audit. We are happy to give you some insight into what the auditor’s conclusions mean and what is necessitated by the government, and the information below should do just that.

During the Audit:

The process leading to the audit conclusions starts during the audit process. This is when you issue your financial statements, and the auditor tests them to determine whether the statements are materially correct. The auditor also looks at the systems and procedures used to generate the financial information to determine if they are free from obvious design deficiencies. After sufficient evidence has been gathered that your financial statements have been fairly stated, the auditor gives an opinion on those statements.

Auditor Unqualified and Qualified Opinions upon Conclusion of the Audit:

Ideally, auditors will provide an unqualified, or “clean,” opinion on the organization’s financial statements. An unqualified opinion will contain language such as “the financial statements present fairly in all material respects” and “in conformity with accounting principles generally accepted (GAAP) in the United States.” If an auditor is unable to render an unqualified opinion, a qualified opinion may be issued. The reason might be a departure from generally accepted accounting principles or a scope limitation. A scope limitation means that, except for the matter to which the qualification relates, the financial statements present the nonprofit’s financial position fairly in all material respects.

When an auditor issues a qualified opinion, the auditor believes the financial statements are fairly stated in all respects except for a material departure from GAAP, and the auditor has decided not to express an adverse opinion. If the scope limitation is severe enough, the auditor may disclaim an opinion on the overall financial statements.

If the auditor decides that the departures from GAAP are so significant that the financial statements as a whole are not fairly stated, an adverse opinion must be issued. An adverse opinion will include language describing what the auditor believes is materially misstated in the financial statements, and the effects of the misstatements. If the effects are not reasonably determinable, the auditors will state that.

In Conclusion:

Your nonprofit staff and the outside auditor should work together to ensure that financial statements are usable, accurate, and timely. Meeting these goals gives users greater confidence in the statements and helps you recognize opportunities for improvement. Stay in contact with the auditor throughout the year about matters such as changes in entity, personnel, industry, debt, ownership, direction of the nonprofit, and chart of accounts. Even though auditors must remain independent and objective, they are still a trusted advisor and resource throughout the process.

All of what goes into and results from an audit can be confusing. Contact Beck and Company CPAs to learn more and to find an auditor that is the right fit for you and your organization.

Nonprofit Financial Audit: Successfully Communicating with your Auditor

Like it or not, your organization will be audited from time to time. This can be an intimidating process, but it doesn’t have to be so bad depending on who you choose and how you communicate with your auditor. Beck and Company’s Certified Public Accountants and Business Advisors are trained to help with nonprofit audits and would be happy to assist you with yours as auditors. Learn more about our audit services here.

As auditors, we know firsthand what makes audits run smoothly for both the nonprofit and the auditor. Let’s take a look at some tips for communicating effectively with your auditor so you know what is needed and expected. In addition, let’s dig deeper into what an auditor will be asking for from you as an organization.

How should you communicate with the auditor during the audit?

Because of the pressure brought on by audits and their results, auditors understand that you may be feeling overwhelmed and nervous. The auditor wants the best for your organization just like you do, but this person can only help if you are open and candid with them. You may be asked about questionable accounting practices or pressures, fraud risk factors, and known deficiencies in accounting systems. Your honesty and genuineness can help the auditor gain a better understanding of what is truly going on with the hopes that they can help you get things resolved. Therefore, you’ll need to be real so everyone can get to the real heart of the matter and work to find solutions. Be open with the auditor about difficult areas you’ve encountered, concerns, questions, and recommendations you may have.

The auditor needs as much information as possible, and the audit process is made easier if this information is shared directly instead of an auditor needing to infer this information from documents. Alert the auditor to any outside consultants, regulatory agency inquiries or future plans, and provide related reports and correspondence. The auditor may ask you to explain significant actual-to-budget and prior-year variances. Be prepared to discuss the results of the year based on your expectations going into the year.

Don’t be afraid to ask the auditor questions. In fact, asking questions is encouraged because it helps you to truly understand the process and be better prepared for future audits. Ask why a particular schedule is requested if you don’t know. You may have a better source for that information, it may already exist in an alternative format, or you may learn a better way to organize your routine tasks as a result.

What information will an auditor ask for that you’ll need to supply?

Ultimately, auditors express an opinion on the broad financial statements. Because of this, most of the detailed schedules they request are merely items your company should have as part of its normal accounting procedures.

The auditor systematically obtains and evaluates evidence about the basic financial statement assertions contained in your numbers including:

Existence or occurrence
Completeness
Rights
Obligations
Valuation
Allocation
Presentation
Disclosure

In addition, you may be asked about any changes in the following and will need evidence. These changes include:

Governance, management, and ownership information
Operations
Technology
Personnel relations
Economic/industry developments and their impact

In summary, your nonprofit financial audit will involve interactions with an auditor. To be successful in communicating with the auditor, you’ll need to be honest and open. You will also need to disclose as much information and as many explanations as possible to what they ask you about. Don’t be afraid to also ask questions of them to truly understand the process. In addition, be ready to supply a variety of financial statements and to address any changes that have occurred since the last audit. These tips for communication and what to supply your auditor will make the audit process more successful and smooth. To find the right auditor for your organization and to use the many audit services Beck and Company CPAs provide, contact us.