Wtritten by Angela Holmes
Due to the severe economic recession, not-for-profit ( NFP) entities have faced challenges over the last several years in managing the impact a contraction in resources has on their organization. Any contraction likely resulted in a workforce reduction, and NFPs are generally understaffed to begin with. This presents management with a challenge: doing a lot more with much less!
Then along comes the mandatory annual audit of the not-for-profit’s financial statements by an independent CPA firm. Is this a curse? An additional unwarranted burden? General annoyance mandated by the board of directors?
The reality is most funding sources require a not-for-profit to be audited annually. And boards of directors endorse this practice, and consider it a very prudent management practice.
As an auditing firm, we believe that with adequate planning and forethought the audit can be managed with efficiency. With the mutual cooperation of all parties, we can minimize the disruption to an already overburdened not-for-profit staff.
Here are the keys to facilitate the audit process as smoothly as possible:
Start the audit planning process well before the end of the fiscal year by meeting with the auditing firm.
Create a critical date timeline, from start to finish … and keep it realistic!
Involve the executive director and a representative of the board of directors (president and/or treasurer) in the planning process.
Schedule fieldwork when it is convenient for the NFP staff, and allow adequate time for them to “get ready” for the auditors.
Ensure the auditing firm makes your staff understand what is expected of them prior to and during fieldwork.
Hold one another accountable to the critical date timeline you established.
Identify any problems early, and address them to solution on a mutual basis, with deadline modifications if necessary.
The not-for-profit staff and the auditing firm should consider themselves mutual partners in the process, and never allow the task at hand to become a situation of conflict.
Working together will ensure that the audit of your financial statements goes smoothly, and all stakeholders are adequately served by the process.