Preparing for an audit is no easy task. If we asked your organization, would you say you are prepared for an audit and that your nonprofit accounting software is able to sufficiently help you with the audit? We hope so, but if not, the following information is for you. If you don’t even have an accounting software for nonprofits, you’ll want to start there. Learn more about implementing a nonprofit accounting software that will assist in automating audit processes here. Let’s take a closer look at successful perspectives needed to be prepared for an audit, the importance of being prepared, and what should be done in advance.
- Successful perspectives in preparing well for an audit
Some staff and board members dread the annual audit, but there’s really no reason to view your nonprofit’s annual audit in a negative light. In fact, an annual audit is an irreplaceable tool to ensure that your financial procedures are in order. It should give you confidence in the strength of your financial systems not stress. If you feel uneasy about your organization being ready for an audit, consider doing a review of your current nonprofit accounting software to see if something more robust may be needed to help you keep up with your financial information and stay organized.
Your auditor should be viewed as a resource, not an adversary. The annual audit is just a verification process of your nonprofit’s financial systems and statements. The auditor will look at the accuracy of the numbers and the processes and let you know if internal control steps should be taken to help protect your nonprofit against fraud. As a result of the audit, opportunities for improvement might be identified, leading to more effective management in the future. How you view the audit, auditor, and outcomes can be the determining factor in an audit being a success or a stress.
- The importance of preparing for an audit
Being prepared for the annual audit will not only assist the auditors, but, by working together, you and the auditors are more likely to discover ways to improve efficiency and minimize errors. Although the audit may at times be disruptive and intrusive, your cooperation in supplying the needed information will contribute greatly to the speed with which auditors can do their work.
The annual audit can be an expensive undertaking, both in employee time and nonprofit money. At the same time, the audit can be more of an investment than an expense if auditors are free to analyze and evaluate accounts and procedures, rather than prepare accounting-type schedules. This can be achieved only through preparation, coordination, and cooperation among the teams involved in the audit. Accounting software for nonprofits is a significant asset in helping with this preparedness.
- Necessary advanced preparations
Nonprofit leaders should discuss with the auditor the need for assistance and establish a high priority for agreed-upon items, while ensuring the time frame is fair to the staff. Audit timing is important. Determine contact people for specific areas under audit and avoid any potential scheduling conflicts, such as vacations, scheduled medical procedures, work schedules, out-of-town needs, and holidays.
Reconcile detail to general ledger account totals. For example, reconcile all bank accounts, accounts receivable, accounts payable, and equipment lists. Requests should be made for templates, copies of prior working papers, and clarification so that you can prepare information in a format acceptable to the auditor.
With the right attitude and preparation, audits will be successful. This will only be the case, though, with the assistance from a nonprofit accounting software. This technology can help get the job done by providing the necessary data in an available and usable format. To learn more about accounting software options such as Abila MIP Fund Accounting or AccuFund Accounting and to get the solution that is best for your nonprofit, contact RBP Methods.