A financial audit might be expected for many reasons such as organization size, the nature of its work, foundations e.g. the sources of its funding, or if it is a party to government contracts. However, nonprofit audits don’t have to be complicated if you understand, more or less, how they work. Nonprofit audits typically include evaluating internal controls, analyzing financial data, and assessing risks.

Check Run Logs

This means that the auditor will examine the procedures and controls that the nonprofit has in place to prevent and detect errors and fraud. To conduct a quality audit, the revenue agent must review the operations and records of the organization. The revenue agent will provide a written request – an information document request – for records. Get our FREE GUIDE to nonprofit financial reports, featuring illustrations, annotations, and insights to help you better understand your organization’s finances. If you need audit support, The Charity CFO and its experts are always available. Most of these verifications and corrections are accomplished by telephone or in writing.

Federal Government Requirements for Nonprofit Audits

All the same, too many refusals might invite a more comprehensive audit later. https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ This article will cover when and why an independent auditor is necessary for a nonprofit organization as well as the generally accepted accounting principles that serve best when a financial audit is necessary. The Susan S. Lewis CPA firm performs audit services in Chicago and nationally.

Excise Tax for Non-Profit Leaders: Understanding Penalties & Compliance

• ‍The first step to auditing a small nonprofit is to select the auditor that is right for your organization.
• If you’d like to learn more about the auditing process or would like to connect with a CPA, contact us today.
• The entities falling under the Smith & Howard brand are independently owned and are not liable for the services provided by any other entity providing services under the Smith & Howard brand.
• An audit starts with the initial contact and continues until a closing letter is issued.
• Financial audits are useful in evaluating your organization’s financial statements and reporting.

The audit is free of consultation with the IRS and devoted solely to evaluating internal controls and documentary accuracy. In the end, this accountant submits an audit report that details the investigative findings such as areas of strength, improvement, weakness, and danger. Leveraging over 30 years of experience, Marshall Jones offers expert nonprofit audits to help you understand your compliance and financial status. Our team is ready to answer all your questions and customize an auditing strategy that fits your specific goals.

We’ve compiled a comprehensive non-profit audit checklist to help guide you through streamlining the process. These templates ensure that your nonprofit strikes the balance discussed in the previous points and includes all of the basic information providers must consider when submitting a proposal. Compliance audits are conducted by government agencies or third-party organizations to ensure that the nonprofit is complying with all applicable laws and regulations. This article is focused on the financial audit, but it is important to understand other types of audits that nonprofits may undergo including internal audits, compliance audits, and program audits. There is no set timeframe for how often a nonprofit should have an audit if not required by law or contract. However, most organizations choose to have a financial audit conducted every year once they reach a point of needing one.

• We also have 6 former nonprofit auditors on staff, so our team is trained to prepare your financial reports precisely how an auditor wants to see them.
• Internal audits are better than nothing but don’t necessarily increase public transparency and accountability—since an internal team could be the root of the problem.
• The Nonprofit Audit Guide will NOT, however, help you identify an independent auditor.
• The main purpose of the nonprofit audit is to provide reasonable assurance that the financial statements are free of material misstatement.
• Unlike for-profit entities, non-profits must address unique challenges, such as compliance with donor restrictions and safeguarding public trust.