| A nonprofit or church audit is a process that | | | | The purpose of many of the internal audit |
| provides reasonable assurance that good | | | | procedures are to ensure that the organization's |
| stewardship is being used in handling and | | | | system of internal controls is operating as |
| accounting for the funds and other assets of | | | | intended. The internal auditors (which very well |
| your organization. | | | | could be volunteers from the organization's |
| The audit may be external (performed by an | | | | financial committee), should develop an audit |
| outside Certified Public Accountant) and/or internal | | | | program and an audit schedule. |
| (reviewed by business people in your organization | | | | Your nonprofit or church may want to consider |
| who understand financial management and are not | | | | consulting with a CPA who is familiar with auditing |
| related in any way to the Financial Secretary or | | | | to assist the organization in designing the internal |
| Treasurer). | | | | audit program and training the internal auditors. |
| Why would your organization actually want an | | | | Once the audit program has been effectively |
| audit? | | | | designed and documented, the nonprofit or church |
| Because it is the best way to: | | | | should be able to use the program for several |
| - Protect the persons your organization elects to | | | | years with only limited involvement of the outside |
| offices of financial responsibility from unwarranted | | | | CPA. |
| charges of careless or improper handling of funds; | | | | Generally, a person(s) who is "qualified" to |
| - Build the trust and confidence of the financial | | | | perform an internal audit will have some |
| supporters of the organization in the way their | | | | experience with accounting principles, such as |
| money is being accounted for; | | | | those gained through bookkeeping, office |
| - Set habits of fiscal responsibility to assure that | | | | management, or accounting courses. |
| when there is turnover in personnel there will be | | | | The person(s) must have the time to devote to |
| continuity in accountability; | | | | the internal audit as it is quite a lengthy process. |
| - Assure that contributions made to the | | | | Sometimes a small church or nonprofit will agree |
| organization with special conditions attached are | | | | with another small church or nonprofit in the same |
| consistently administered in accordance with the | | | | locale to have the treasurer of each audit the |
| donors' instructions, and thereby letting donors | | | | other. |
| know their contributions are being used as | | | | Often churches have accounting professionals in |
| intended; | | | | their congregations who are not serving that |
| - Provide checks and balances for sums received | | | | church in any of the financial positions who are |
| and expended. | | | | willing to perform the audit as a donation of |
| Most nonprofit or church audits are internal. An | | | | services. An audit is not a reflection on the |
| internal audit consists of selected auditing | | | | competence or integrity of your financial staff. |
| procedures performed by individuals inside your | | | | Rather, it is a routine procedure designed to |
| organization rather than by an outside CPA. | | | | protect both your staff and your church or |
| Internal audits can be a very cost effective | | | | nonprofit. |
| means of improving the organization's system of | | | | In conclusion, remember...conducting an audit is not |
| internal controls without the expense of a full | | | | a symbol of distrust..it is a mark of responsibility. |
| scope outside audit. | | | | |