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Common Audit Pitfalls and Misperceptions
September 26, 2018 @ 11:30 am - 1:00 pm
How to use MIP to help with your audit While not required by law, one reason a nonprofit might conduct an audit is to demonstrate the organization’s commitment to financial transparency and accountability.
And while a nonprofit can spend considerable resources for its annual audit, it is important that it consider the following to ensure the audit is a success.
- No delays: An audit needs to avoid any major delays.
- Minimal accrual and year-end adjustments: The nonprofit needs to ensure that all accrual and year-end adjustments are completed prior to the start of the audit.
- Minor board and management comments: It is a good idea to have an exit interview after the fieldwork to review the audit’s results.
- No material weakness or significant deficiency: This is a deficiency in internal controls that could negatively impact financial integrity.
- Nonprofit should prepare audited financial statements and related disclosures: The organization should have the ability and accounting systems to prepare the audited financial statements and related footnotes and disclosures.
- Fraud detection is not purpose of audit: While nonprofit leaders may believe the annual audit will uncover fraud, it is very unlikely this will occur. Auditor does not guarantee financial statement accuracy:
While auditor does issue an opinion on the nonprofit’s financial statements, the auditor does not certify or guarantee its accuracy. Those attending the forum will receive handouts.