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What Does Your Board Think About Your Audit?

best practices board finances fraud reporting Feb 23, 2023

What does your board think about your audit?

How much do your board members actually know about your organization's audit? 

Do they understand the basics of what an audit is and why it's important to your nonprofit? 

     If not, you're not alone. A recent survey of nonprofit leaders found that many boards lack a basic understanding of financial audits. So, what can you do to ensure that your board is up to speed on this critical issue? Here are some tips: 

1. Hold a board training session on auditing basics. 

2. Make sure key board members are involved in the audit process from start to finish. 

3. Use data from your audit to help inform strategic decisions made by the board. 

What is a nonprofit audit and how is it used? 

     An audit is an independent and objective financial statement analysis that assesses financial data to determine if it is in compliance with Generally Accepted Accounting Principles (GAAP). It is conducted by a Certified Public Accountant (CPA), or team of professionals, who perform a series of tests and investigations to provide reasonable assurance that financial statements are materially correct in accordance with GAAP.  It is not a test of 100% of the organization’s transactions or of the internal controls.    

The board's role in the audit process

     The board plays an important role in the audit process. Accurately assessing a nonprofit's financial health requires input from all stakeholders, including board members who are invited into and fully engaged in the process. This helps ensure that the audit is conducted thoroughly and provides an unbiased point of view. Not only does this benefit the organization, but it also instills confidence in donors and funding sources. By taking part in the audit process, boards can help identify any potential risks and opportunities for improvement that are essential to the finance operations of the nonprofit. 

What to expect from your auditor

If you are working with an auditor, it can be a bit daunting at first. It doesn't have to be that way though! The best auditors will take an interactive approach to their meetings and make sure to thoroughly explain any complicated topics in language that is accessible and easy to understand. You can help ensure the effectiveness of your audit by asking plenty of meaningful questions and creating a two-way dialogue with your auditor. 

Thanks for reading! I hope this gives you a better understanding of what to expect during an audit and how the board can be involved. 

     I'm excited to offer more on this topic of nonprofit audits in an upcoming  FREE webinar: Everything You Need To Know About Nonprofit Audits. See you there! Pick the best time for you by going to my registration page today!


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