External auditors, in contrast, give your organization credibility and are often required for compliance with funders and regulators. For example, some US jurisdictions demand an external audit from nonprofits whose annual revenue exceeds a certain threshold—a threshold that varies between the different jurisdictions. A nonprofit auditing firm can unearth the discrepancies, relationships, and transactions that activated the IRS audits in the first place. Remedying these things sooner rather than later can preclude unwelcome examination by the federal government. As a CPA auditor, I have extensive experience in financial statement audits for non-profit organizations of all sizes. However, even if your nonprofit isn’t required to undergo an audit, it can still be worthwhile to conduct one to get a better understanding of your organization’s financial situation.

• As a result, it is considered “best practice” to refrain from engaging the same individual or firm for both auditing and non-auditing services (other than filing IRS annual reports, such as the IRS Form 990).
• The real lesson to draw in my view is what is missing from the merchant’s enterprise – an internal auditor.
• Finally, solid financial information is essential for long-term planning and the ongoing development of your organization and its mission.
• If you won’t have enough time to complete your audit, start incorporating the recommendations, and fill out the form by the deadline, you can file for an extension of up to six months via IRS Form 8868.
• In many cases, the most time-consuming part of the audit process is choosing an auditor.

Effective nonprofit auditors think of the customers served to understand risks

Dedicated audit preparation comes with our standard bookkeeping and accounting services for mid-sized to large nonprofits and is available as an add-on for small organizations. Plus, we can suggest potential auditors and work with you to develop and implement your post-audit action plan, customizing our approach based on your unique needs and goals. Either way, if you need help with this or any stage of the audit process, don’t hesitate to reach out to financial professionals like the experts at Jitasa. Our years of experience working exclusively with nonprofits like yours will help you approach audits with confidence and make the most of them. Regardless of your nonprofit’s reporting deadline (or lack thereof), we recommend completing your financial audit before completing your annual tax return so you can include the changes you’ve made as a result of the audit in it.

It Figures Podcast: S3:E12 – Lease Accounting is for EVERYONE

This process will help strengthen public confidence in the organization’s financial transparency as well as give members an opportunity to share their feedback. By understanding the goals behind an audit, nonprofits can strive for greater accountability and improved long-term success. The primary goals of a nonprofit audit are to provide transparency into the operations and financial health of the organization. Additionally, this allows organizations to make informed decisions about how they manage their funds, endeavor to be compliant in their operations, and demonstrate good stewardship of donor funds. Regular audits provide non-profits with essential insights that enhance both financial transparency and operational efficiency.

The Auditors’ Report

Unlike for-profit entities, nonprofit revenue often involves donor restrictions or grant conditions. Auditors must verify compliance with these stipulations, ensuring https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ revenue is recognized according to donor intent and applicable accounting standards. When an organization fails an audit, it faces significant audit consequences, including potential legal repercussions and loss of funding. Compliance issues may arise, prompting the need for corrective actions to address deficiencies.

How to Fill Out a W-9 Form for Nonprofit Organizations

Depending on your nonprofit’s spending, size and source of funding, you may be required to have an annual nonprofit audit completed. Rely on Doeren Mayhew’s Michigan nonprofit auditors to determine if your organization needs an audit and perform the audit accounting services for nonprofit organizations in compliance with regulations governing nonprofit audits. Financial audits primarily look at your nonprofit’s financial statements to find opportunities for improvement. The auditor may suggest ways to cut costs or recommend changing certain internal controls. When determining the scope of an audit, it’s important to consider any areas where there could be potential discrepancies or weak points in operations or governance. Certified Public Accounting firms verify that nonprofits comply with federal tax laws and regulations during the audit.