What is a Non-Profit Audit?
A Non-Profit Audit is a process by which an experienced non profit auditor performs an assessment on a Non-Profit organization and makes a written report of the findings. The report includes the findings, observations, and recommendations made during the audit.
Because many organizations are tax exempt, they are required to file annual tax returns with the IRS. These returns contain key financial data, including revenue and expenses. In addition, they must disclose certain information about their financial records, like the amount of money spent on goods and services, the amount of revenue from fundraising, and more. Audits can be performed to verify the accuracy of these financial records and non-profit reporting to ensure that financial transactions are done properly, in accordance with applicable tax laws.
Non-profit audits have been around for decades. Early Non-Profit audits focused primarily on financial records, like bank statements and bank reconciliations. More recently, Non-Profit audits have been expanded to include other types of information that are relevant for financial management. For example, auditors can make recommendations about policy changes or changes in accounting practices that might improve financial management. Audits can also be used as an opportunity to conduct more in depth investigations of an organization’s operations and operations management practices.