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Video Q&A for Subscribers: May 2024 [SUBSCRIBERS-ONLY]
Ben and Mike answer questions from subscribers about Board liability exposure, deciding whether a new organization should have a broad or narrow focus, how receiving more than $50,000 in revenue impacts an organization’s Form 1023-EZ, and when nonprofits should think about changing audit firms.
![How to Make Your Nonprofit Audit Committee More Impactful [SUBSCRIBERS-ONLY]](https://images.squarespace-cdn.com/content/v1/5e6ccadfb4659c1d51df14d5/1677020091627-XTQN5HH1TSD9V623Z7IZ/ran-berkovich-kSLNVacFehs-unsplash.jpg)
How to Make Your Nonprofit Audit Committee More Impactful [SUBSCRIBERS-ONLY]
Audit committees for nonprofit organizations are charged with filling a very important and broad fiscal and financial accountability and governance oversight role. Most nonprofit audit committees center their attention on the back-end of the annual financial statement audit process when they receive draft auditor reports. While this is an important function, audit committees can be more impactful if they shift more of their focus to the front-end of the annual audit process and expand their internal control and business practices oversight roles.
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Audit Planning Calendars Can Make Audits Less Stressful and More Efficient [SUBSCRIBERS-ONLY]
Financial statement audits have natural “built-in tensions” between nonprofit organizations and their independent auditors. These tensions are advantageous from a checks and balances point of view but can lead to communication challenges if not properly managed. Agreeing on a detailed planning calendar at the front end of the audit will make for a less stressful and more efficient audit process.
When Designing an RFP for Audit Services, Think Good First Impressions and Efficiency
Think of your request for proposal (RFP) for audit services as your initial introduction and handshake. Your goal is to make a good first impression to the prospective audit firm. You want to convey a message that is positive, thoughtful, and efficient. If you can demonstrate that your organization will be the smoothest audit on the planet, the organization will be more likely to attract high quality audit firms to submit a proposal and obtain lower fee estimates.
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How to Get the Most Out of Audit Firm Interviews [SUBSCRIBERS-ONLY]
You have done everything right, prepared a request for proposal (RFP), obtained a list of prospective audit firms, received proposals from the audit firms, and narrowed your choice down to the top three to conduct live interviews. Now the most important step: how to conduct successful interviews to help ensure the “best” selection is made.
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Always Add Written Management Responses When There Are Audit Findings [SUBSCRIBERS-ONLY]
Audit findings are not unusual. Most nonprofit organizations will have many more years with audit findings reported by their auditors than years for which there are no findings. Audit findings tend to produce feelings of negativity and thoughts that something is wrong. Adding thoughtful written management responses will turn negative feelings into positive and constructive actions
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Auditor Continuance: An Annual Question, Not an Annual Change [SUBSCRIBERS-ONLY]
The question of how long to continue with the same auditor is often sitting somewhere off the radar screen. This is both the problem and the answer. The process of asking and answering the auditor continuance question should be part of the audit committee’s standard operating procedures and a standard annual checklist item for the audit committee.
Q&A #39 – How should a small-staffed nonprofit address audit findings on segregation of duties?
Addressing segregation of duties findings in an audit is a common challenge for small-staffed nonprofits, and this issue can best be mitigated by proactive front-end outreach and communications with your independent auditors and audit committee, and by submitting a formal written Management Response to be included in the auditor’s Management Letter before the final draft is issued.
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Three Key Planning Steps to Get a Head Start on Your Next Audit [SUBSCRIBERS-ONLY]
With disruptions from COVID-19 continuing into the foreseeable future, it is best to start planning for your next year-end financial statement audit early. Odds are that your next audit experience will be different than your last one due to the many programmatic and operational changes that most nonprofits have experienced this year. Investing some extra time in front-end logistical planning will lead to smoother sailing and better outcomes.
Q&A #18 – Is it reasonable to use the same CPA firm to do our audits for more than 6 years?
This is a very common and important question that must be considered on a regular basis. The key to the answer is defining and establishing what is the “regular basis” in your governance related financial statement audit management practices.