What Not To Do During Your Nonprofit Audit
This blog will discuss what you should not do in your nonprofit’s audit.
Audits are tricky and sometimes daunting tasks. The process can be long, and putting all of the pieces together for auditors can be messy if not otherwise prepared beforehand. We have already discussed what you should do regarding the auditing process (you can read it here), and now we will discuss what you should not do. As important as it is to know the steps you should take, knowing what to avoid will save you time, money, and resources.
Not Staying Up to Date on Laws and Regulations
Oddly, your nonprofit organization is probably not keeping constant tabs on the latest accounting regulations or compliance requirements. Your organization is changing the world for the better; that is where your attention should be. However, auditing is necessary, and there is no way around it. Time and resources need to be dedicated to it.
Since there is no escaping it, you might as well be ready for it. Staying in touch with a CPA or an accounting firm to learn about updated law and code can put you ahead of the game. As time progresses, rules and policies surrounding nonprofit organizations can change, and you must be aware of them. Reach out to professionals in accounting to get updated information and be prepared in advance to prevent confusion at the last minute.
Not Seeking Professional Help
Once more, your nonprofit organization is focused on your cause, not being experts on the auditing process. There is a lot to be said for letting the professionals handle things for you, as many auditors and accountants can attest – mistakes can be made when organizations “have themselves a go.” Incorrect records, messy books, and unaccounted-for items will only lead to more time and cost for your organization.
It is in your best interest to ensure the auditing process is done correctly the first time to avoid needing to redo anything, which will only exhaust the time and resources that will have to be poured into it. Not to mention that putting forward inaccurate information cause raise suspicions from auditors and leads to more frequent inquiries by them, which means more potential audits.
Waiting for Requests
Waiting for the auditor’s request list of documents they want to see is a recipe for scrambling last minute and faulty documentation. Every organization is different; you and your team need to come together and discuss the key financial documents you anticipate being asked to provide. Ask, what are our organization’s significant transactions? Where is the majority of our cash flow coming from?
All of these questions can only be answered on a per-organization basis.
Forgetting That the Audit Process is Year-Round
The four steps of an audit process that we have previously discussed are: obtain, review, reconcile, and ensure. While you will not be actively going through the process of an audit every day, you must not forget to implement those four steps year-round. Obtain documents by keeping them organized and accounted for throughout the year, review them periodically for accuracy, find times to reconcile, and ensure the accuracy of items during intervals of the year.
Doing checkups with your CPA or accounting firm throughout the year to discuss these steps will prepare you for an audit well in advance. They can make things easier and more organized in your organization. The more you do to be ready for an audit, the simpler it becomes.
The auditing process can be long and tedious, not to mention all the resources that need to be utilized. Some steps must be taken, and procedures must be followed to the letter. However, as it is essential to know what you should do, it is just as important to know what you should not be doing.
Contacting your CPA or accounting firm to stay up to date on laws and regulations that need to be followed will help alleviate any potential confusion you may run into when you realize that one process was supposed to be done differently or that you are missing key pieces of information.
Trying to do the auditing independently can lead to messy books and mistakes. Working with professionals will simplify the process, and you can spend your time focusing on your organization and the mission you are trying to accomplish. “Having it a go yourself” can lead to added time and costs.
Do not wait for requests from auditors; use intuition and critical thinking to determine what documents will be asked of you to provide. Checking in with professionals can help with this as well.
Always remember that the auditing process is year-round; do not forget it. It is imperative to understand that implementing systems and procedures throughout the year to make things easier come time for your audit will pay huge dividends. Keeping documents neat and organized and all receipts are just some ways you can make the process much less daunting. Have further questions? Contact us at firstname.lastname@example.org, and we will be happy to speak with you.