BCS ProSoft is a leading business management technology provider and professional services firm specializing in Sage, Deltek, and ARM. With headquarters in San Antonio and satellite offices in Houston, Denver and Tulsa, we’ve served over 1,500 customers at the intersection of people, process and technology. Gain knowledge in understanding, assessing, and testing internal control over compliance as you apply the Uniform Guidance.. Picking the right audit partner and specialist financial software can help make sure you are prepared to pass the audit process with positive outcomes. Your system must feature a robust audit trail to track all changes and activities, ensuring transparency and accountability throughout the many tasks, documents, and workflows in the system.

Audit Fieldwork and Report

Auditors must verify that funds are segregated correctly and spent in accordance with both legal and donor-imposed restrictions. They also examine how organizations track and report conditional grants, in-kind donations, and pledges—especially those that span fiscal years. A deficiency in operation exists when a properly designed control does not operate as designed or when the person performing the control does not possess the necessary authority or qualifications to perform the control effectively. This is a perfect example of the deficiency inherent in off-the-shelf accounting software in their inability to generate financial statements for your audit. If your auditor creates financial statements for your audit, then they will report a deficiency in operation on your audit report. Auditors will also review the organization’s policies and procedures, including its operations and management.

About This Data

Another circumstance where a nonprofit organization may have to obtain an audit depends on the state in which that nonprofit is located. About ⅓ states require nonprofits to be audited if they solicit funds from the residents of their state and are over a certain annual revenue threshold. An independent audit enhances the credibility of financial statements, fostering trust among stakeholders, donors, and beneficiaries.

• Auditors verify that program expenses are adequately documented and reported in accordance with the organization’s goals.
• Audited financial statements are crucial for ensuring financial transparency and accountability.
• Addressing these challenges is essential for accurate and reliable audited financial statements.
• These are crucial for nonprofits as they help maintain their tax-exempt status and can influence public confidence in their operations.
• Accounting, confirming, following up, and ascertaining business patterns allow the auditors to create a narrative of where a nonprofit stands.

Types of Nonprofits

In these cases, the Board should determine which type and frequency of audits to conduct based on the organization’s circumstances. Browse millions of annual returns filed by tax-exempt organizations with ProPublica’s Nonprofit Explorer. If your nonprofit is not required to have an audit, you may still choose to have one conducted on a voluntary basis. If the auditor finds any non-compliant transactions, they may be reported to the board of directors as findings of the audit.

Different Types of Audits for Nonprofits

This type of audit is required for nonprofits that receive government funding, and it is also recommended for nonprofits that want to maintain good financial practices. A nonprofit audit is an independent examination of a nonprofit organization’s financial statements and records to ensure compliance. For non-profit organizations, audits are more than just a regulatory requirement—they are essential for maintaining transparency, building trust with stakeholders, and ensuring proper stewardship of resources.

Legal frameworks for Data Protection (GDPR, Indian Data Protection Bill)

During non-profit audits, priority areas include financial statements, internal controls, regulatory compliance, grant management, and fundraising activities to ensure transparency and proper use of resources. This includes organizing financial records such as receipts, bank statements, invoices, and payroll records. It’s also important to compile a list of the organization’s assets, liabilities, and any pledges or contributions made during the period to be audited. These documents provide a clear picture of the financial health of the nonprofit and support the accuracy of its financial statements. Because state laws vary in the scope of their regulation of charitable nonprofits, this Guide includes a 50-state chart that shows whether there is an audit requirement in each state, and if so, under what conditions. This Nonprofit Audit Guide will help you understand what independent audits are, and help you prepare your nonprofit for an audit.

Types of Nonprofit Audits

• In an increasingly digital profession, data security has become one of the most critical challenges facing finance and accounting professionals today.
• Financial audits are often used for tax purposes or to meet requirements for certain grants.
• 2025 Federal Funding FAQ’s As federal policies continue to evolve, nonprofit organizations must stay informed about executive actions that may impact their operations, funding, and compliance requirements.
• By providing audited financial reports and annual reports on your website, you’re helping build trust with your donor base.
• The cost of an independent audit varies depending on the geographic region where the nonprofit is located and how large the organization is.
• Using true fund accounting software, like FastFund Online will help to eliminate the potential internal control deficiencies inherent in off-the-shelf accounting software.

Kelly has expertise in audit, review, and compilation services across diverse industries, including nonprofit organizations, construction, manufacturing, and technology. Kelly possesses an extensive background in auditing accounting services for nonprofit organizations nonprofit organizations, particularly those receiving federal funding. Instead, other federal or state agencies mandate audits for certain nonprofit organizations depending on several circumstances.