By understanding the importance https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ of audits in the nonprofit sector, organizations can enhance their financial health, effectiveness, and overall impact on the communities they serve. A nonprofit audit is a review of your nonprofit’s financial records to verify their accuracy, compliance with laws, and adherence to accounting standards. Adopting best practices can significantly enhance the audit process and the quality of audited financial statements.

Shelley Ombrembowski, CPA, CIA

These principles are vital in fostering financial integrity, which ensures that funds are managed responsibly and effectively. By openly sharing financial reports and operational practices, non-profits demonstrate their commitment accounting services for nonprofit organizations to ethical standards and responsible stewardship of resources. In many cases, the most time-consuming part of the audit process is choosing an auditor. Your audit report will be most helpful to your nonprofit if you select an auditing firm with a strong track record that aligns with your needs and budget. Regardless of your nonprofit’s reporting deadline (or lack thereof), we recommend completing your financial audit before completing your annual tax return so you can include the changes you’ve made as a result of the audit in it. Annual revenue thresholds for audit reporting have been climbing since the NPRA’s enactment in 2013.

Report Fundraising Events on Form 990

Our team members are available for questions and consultation by telephone and email throughout the year, not just during the audit. This allows us to deliver audits that are accurate, efficient, and highly informative for your leadership and stakeholders. We take time to get to know our clients during the planning stage of the audit, so the remaining stages of the process are performed as quickly and smoothly as possible. A boundary-less IT security defense architecture (design) is definitely one that nonprofits should consider. One more point, data is created and transformed at endpoints, and in my view it is best to think of data as the ultimate endpoint. So really, start you cyber security plans with your knowledge of data and data governance — donors, employees, volunteers, clients (beneficiaries), partners, collaborators, vendors.

Revenue Recognition for Not-for-Profits: Exchange Transactions vs. Contributions

• For example, some nonprofit bylaws require annual audits, but others state that they should occur every two, four, or five years.
• In brief, the IRS wants to confirm that the foundation, charity, or other nonprofit concern is following the prescribed rules of reporting and fulfilling the purpose upon which its tax exemption is based.
• Many entities prioritize financial transparency to maintain trust and accountability.
• Nonprofits leaders should require their staff to get a solid grip on the costs and impacts of delays, so they can make better decisions about funding opportunities and take steps to mitigate negative impacts.

These audits verify that your donors’ stipulations have been followed and that program outcomes align with the funders’ expectations. This is your proactive check-up, often done by in-house staff or independent auditors. For instance, an operational audit might assess the efficiency of your volunteer management system, ensuring resources are used effectively.

Remember, the goal of an audit isn’t just to fulfill a requirement; it’s an opportunity to identify strengths and weaknesses, guiding where to direct improvement efforts. A great audit is thorough, transparent, and a stepping stone to enhancing your nonprofit’s effectiveness. Picking the right audit partner and specialist financial software can help make sure you are prepared to pass the audit process with positive outcomes. Your system must feature a robust audit trail to track all changes and activities, ensuring transparency and accountability throughout the many tasks, documents, and workflows in the system.