Church Audit - Why Would Our Church Or Nonprofit Organization Actually Want an Audit?

A nonprofit or church audit is a process that provides reasonable assurance that good stewardship is being used in handling and accounting for the funds and other assets of your organization.

The audit may be external (performed by an outside Certified Public Accountant) and/or internal (reviewed by business people in your organization who understand financial management and are not related in any way to the Financial Secretary or Treasurer).

Why would your organization actually want an audit?

Because it is the best way to:

* Protect the persons your organization elects to offices of financial responsibility from unwarranted charges of careless or improper handling of funds;
* Build the trust and confidence of the financial supporters of the organization in the way their money is being accounted for;
* Set habits of fiscal responsibility to assure that when there is turnover in personnel there will be continuity in accountability;
* Assure that contributions made to the organization with special conditions attached are consistently administered in accordance with the donors' instructions, and thereby letting donors know their contributions are being used as intended;
* Provide checks and balances for sums received and expended.

Most nonprofit or church audits are internal. An internal audit consists of selected auditing procedures performed by individuals inside your organization rather than by an outside CPA.

Internal audits can be a very cost effective means of improving the organization's system of internal controls without the expense of a full scope outside audit.

The purpose of many of the internal audit procedures are to ensure that the organization's system of internal controls is operating as intended. The internal auditors (which very well could be volunteers from the organization's financial committee), should develop an audit program and an audit schedule.

Your nonprofit or church may want to consider consulting with a CPA who is familiar with auditing to assist the organization in designing the internal audit program and training the internal auditors. Once the audit program has been effectively designed and documented, the nonprofit or church should be able to use the program for several years with only limited involvement of the outside CPA.

Generally, a person(s) who is "qualified" to perform an internal audit will have some experience with accounting principles, such as those gained through bookkeeping, office management, or accounting courses.

The person(s) must have the time to devote to the internal audit as it is quite a lengthy process.
Sometimes a small church or nonprofit will agree with another small church or nonprofit in the same locale to have the treasurer of each audit the other.

Often churches have accounting professionals in their congregations who are not serving that church in any of the financial positions who are willing to perform the audit as a donation of services.
An audit is not a reflection on the competence or integrity of your financial staff. Rather, it is a routine procedure designed to protect both your staff and your church or nonprofit.

In conclusion, remember...conducting an audit is not a symbol of distrust..it is a mark of responsibility.

Vickey Boatright, nonprofit fund accountant, church Financial advisor, and editor of the website: http://www.freechurchaccounting.com a resource for free financial spreadsheets, an internal audit checklist, and nonprofit and church accounting.