It is crucial to select a firm that not only possesses extensive experience in nonprofit audits but also has a deep understanding of both national and state-specific regulations. Such a firm can provide expert guidance on federal “Single Audit” requirements, ensure adherence to GAAP, and advise on the nuances of state-specific rules in Ohio, Georgia, or any other state where the nonprofit operates. A knowledgeable CPA firm can identify potential compliance gaps, assist with meticulous documentation, and help implement robust internal controls, ultimately streamlining the audit process and mitigating risks. An independent nonprofit audit involves an examination of your organization’s financial records, accounting practices, internal controls, transactions, and financial statements.
Audit Readiness Services
An independent audit may be among the nonprofit audit requirements for those enterprises receiving federal funding. Congress to assure compliance with rules governing federal grant management standards and nonprofit organizations, particularly those that spend more than $750,000 of said funds annually. The same legislation advanced consistent procedures to conduct an independent audit of a nonprofit organization. Recipients of government contracts may also fall subject to financial review, i.e., they must submit audited financial statements upon request of the agency that awards the contract.
Our Services
It assesses your tax-exempt status, unrelated business income, and proper handling of donations and expenses. Working with Dimov Audit ensures that you’re not navigating these steps alone—we’ll guide you at every phase. Dimov Audit works closely with nonprofit clients at every step, ensuring clarity and minimal disruption. Take our 2-minute survey to find out if outsourced accounting and bookkeeping is a good fit for your organization.
Conduct the audit.
Classy’s comprehensive fundraising platform offers unified giving tools that help optimize the donation process. In fact, 95% of Classy’s customers choose our platform year after year for the highest-quality solutions. The auditor you choose will have a big impact on the quality and actionability of The Key Benefits of Accounting Services for Nonprofit Organizations your audit.
- Although centralized, the system can be configured to facilitate access to external auditors so they can run the nonprofit audit remotely.
- Accounting, confirming, following up, and ascertaining business patterns allow the auditors to create a narrative of where a nonprofit stands.
- Be prepared to provide auditors with any additional information or support they may need.
- If you received a health grant, a program-specific audit would ensure those funds are used exclusively for health-related activities and outcomes.
- Remember, to keep copies of all documentation received with your gifts (donor acknowledgement letter, cancelled check, grant agreements, etc.).
- Effective financial management is the backbone of a thriving nonprofit, ensuring stability, transparency, and informed decision-making.
When Is a Nonprofit Audit Required?
With the right partner, it becomes a valuable tool for strengthening accountability and ensuring mission impact. Dimov Audit combines regulatory expertise, industry knowledge, and client-first service to make your audit experience clear, compliant, and confidence-building. These audits are often reviewed by federal oversight agencies, making accuracy and experience critical. Grant funds often come with strict restrictions for their use and it’s up to your organization to use proper grant accounting practices. Your organization should be maintaining detailed records of any grant-funded activities.
- The real lesson to draw in my view is what is missing from the merchant’s enterprise – an internal auditor.
- Absent the curiosity of the IRS, nonprofit leaders may seek audited financial records for other reasons.
- For many organizations, the idea of an audit conjures images of endless paperwork, tough questions and stress.
- Suddenly, you remember a third-party auditor is arriving today to review your financial statements and internal controls.
- Finally, solid financial information is essential for long-term planning and the ongoing development of your organization and its mission.
- As we mentioned, many foundations and government organizations will want audited financial statements when applying for grants.
Resources
Separate ledgers for general funds, restricted funds, and endowments enable accurate tracking of resource allocation and expenditure. Cash flow management is critical for nonprofits, which often face fluctuating donation patterns and grant disbursements. This statement helps stakeholders assess the organization’s ability to sustain operations and fund initiatives. The statement of functional expenses further breaks down expenses by program, management, and fundraising categories, highlighting the efficiency of resource allocation. If possible, start implementing changes before you file your nonprofit’s annual tax return so your efforts will be reflected on your nonprofit’s Form 990. Then, they’ll prepare an audit report, where they issue a formal opinion that reflects their findings—which could be unqualified (clean), qualified, adverse or a disclaimer.
Going Concern Issues for Nonprofits
For nonprofit leaders, the annual audit is more than a financial exercise—it’s a critical checkpoint that a wide range of stakeholders rely on to gauge organizational integrity and performance. A smooth audit builds trust, reinforces your credibility, and validates the way your organization stewards its funds. On the other hand, a sub-par audit can tarnish your organization’s reputation and damage its relationships. Ask your auditor at the beginning of the year to provide you with a copy of the PBC (provided by client) schedule, so that you can collect all the materials you’ll need for your audit throughout the year. This will save you and your entire staff time during the audit and avoid having to pay another auditing fee for your auditor to return because you https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ weren’t prepared.