Your Audit – How’s it going?
Joan M. Renner, CPA, CGMA, Director 501(c)(fit!)
Most nonprofit leaders have been involved in selecting an auditor. Audited financial statements are key to obtaining grant money and supporting the Board’s oversight. But most would agree that audits come with headaches when the audit doesn’t go as expected.
You’ve probably experienced audits that aren’t completed on time, audits that have surprise findings and auditors that are, well, annoying. Is it expecting too much to just have the audit done on time, with fair results and have it not be annoying?
The question here is, are you really hiring what you value? Let’s be honest. A lot of auditor selection comes down to price. And you know what? No one ever looks back at that decision and congratulates the auditors for completing the audit for the right price. Nonprofits often hire for price, but then evaluate the auditor based on a completely different set of factors—was it done on time? Were the results as expected? Were the auditors annoying?
Did you know that these expectations are not even addressed in the auditing standards?
Basically, auditing standards require that the audit be effective, and include the procedures, documentation and reporting contained in professional standards. There’s nothing in the auditing standards that requires the audit to be completed on any timetable, there’s no requirement that you agree with the findings, and there’s no requirement that the auditors will not be annoying.
So how do you get rid of audit headaches?
For starters, hire what you value. Ask prospective auditors about their plans for meeting your deadlines and discuss potential delays. Find out their plan for keeping you informed about audit issues and their schedule for audit communications.
Hire the right fit. Select an audit firm that views your organization as an important client. If you’re a smaller nonprofit, with normal issues, a smaller firm may be a better fit for you than a bigger firm. A firm that values your relationship will give your audit higher priority.
What about nonprofit experience? That’s a given. An audit firm that has nonprofit audit specialists who work with organizations like yours can better understand your issues and bring you solutions based on their experience.
Then, do your part to get the books in shape before the audit, and be ready on time. If you just came through a difficult audit, look for the following signs that the difficulty might be yours: taking a long time to prepare for the audit, false starts, and audit adjustments that make big changes to your bottom line. If you’re not ready, or if your accounts need fixing, you could be losing your window in the auditors’ schedule. Once your audit window passes by, the auditors have to move on and it’s hard to get back on the schedule. The best preventive for audit headaches is to be audit-ready, even if you have to seek professional help to prepare.
What can we learn to promote a more positive audit experience?
Hire what you value. If you want timely completion and good communication, ask for it in the RFP.
Hire the right fit. Select an audit firm that views your organization as an important client.
Be audit-ready. Analyze the cause of previous delays and add resources to audit preparation if needed.
There’s a helpful session on supporting a positive audit experience in our new continued financial leadership training seminar for emerging nonprofit professionals, Raising the Bar—Preparing for Higher Expectations, called Acing Your Audit—managing your audit from start to finish.
Strong controllership is the key to audit readiness. There’s a helpful session about controllership in our 501(c)(fit!) Financial Leadership Training for Emerging Nonprofit Professionals seminar.
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