Financial audits are a necessary part of life as a nonprofit organization. Audits provide an organization with tools that can help with best practices and offer accountability to the institution in addition to simply being necessary for compliance with various covenant and membership requirements. The idea of undergoing a financial audit can be less than appealing, and the notion of having surgery sparks similar, less-than-positive feelings. In both situations, it is important to focus on the significant value that results.
Here at RBP Methods, we can help you properly prepare for an audit and make the process less painful and more beneficial. We do this by offering essential fund accounting software solutions that can automate processes and help you to be truly prepared and equipped with all of the data necessary for an audit. One such software, Abila MIP Fund Accounting, is a preferred software for fund accounting for nonprofits. It makes the reporting cycle more streamlined and efficient while making data easily and quickly accessible and traceable.
In addition to implementing and using a powerful fund accounting software, how can your nonprofit prepare for, manage, and benefit from a financial audit? The following tips offer suggestions to do just that.
- Before the Audit- The Pre-Op:
Advanced preparation for your audit is essential. Your team should create and use a list of items that will need to be prepared before the auditor arrives. Having all of the necessary documentation ready for the auditor saves time and money in addition to resulting in less staff distractions during the actual audit process. Remember that auditors are likely to request additional reports and information based on what is initially supplied. Abila MIP Fund Accounting makes this process of preparing documents and responding to additional documentation requests easy because the software maintains a clear audit trail. This way auditors can verify the accuracy of financial statements. In order for this audit trail to be effective year after year, don’t forget to add these requested reports the preparation list for the following year.
Choosing the right professional who will work with your company is extremely important. Just like choosing a competent surgeon that specializes in what needs to be operated on, you’ll want to choose an auditor that you feel comfortable with and who is experienced at working with not-for-profit organizations. Think of your choice in auditor as a partner not a distant professional.
In the preparation process, be clear about deadlines. The timeframes for your audit are crucial. If bank submission, board meeting, audit committee session, or grant deadlines need to be met, be sure to communicate these to all teams involved and do this early on in the process. Clear communication eliminates surprises and delays.
- During the Audit- The Surgery:
Similar to the notion of having surgery without the surgeon present, the greatest efficiency and most useful results come from maximizing your time with the auditor. If the proper software has been used before the audit to streamline necessary data and create reports, this should not be a problem. Be sure to get as much done and as many questions answered while the auditor is onsite. If there are any open items that cannot be accomplished, set completion deadlines before the auditor leaves.
- After the Audit- The Post-Op:
The most significant aspect of an audit is what results from it just as the results of surgery are why you had it in the first place. Without following recovery and therapy instructions, a successful operation still will not produce the intended outcome. Similarly, an audit will not be beneficial to your organization without implementing changes and using suggestions to make improvements. The most valuable part of an audit is often the management comment letter. It should highlight areas of control deficiency, concerns, and needed improvements. The implementation of changes, as appropriate, are the central benefit that an audit affords your organization. In addition, the results can help make future audits even smoother in the upcoming years.
For more information about Abila MIP Fund Accounting or to get this important software solution for your nonprofit, contact us at RBP Methods.