keeping your audit costs down
DESCRIPTION
Learn what an audit means for a nonprofit, the Do's and Don'ts of requesting one from a CPA firm, and ways to reduce overall audit costs.TRANSCRIPT
Keeping Your Audit Costs Down
Keeping Your Audit Costs DownPresented By: W. Andrew Powell, CPAPrincipal Halt, Buzas & Powell, Ltd.
What does an audit really meanDo you need an auditWho hires the auditorRequest for proposalEngagement LetterAudit timelineAuditor’s information request
Introduction
Governmental funding Donors State charitable registration Paid fundraiser Board of Directors
Other types of service◦Compilation◦Review◦Agreed upon procedures◦Program specific services
Is an audit required?
Process for testing the accuracy and completeness of information
Allows a CPA to issue an opinion Includes:◦Cover letter signed by the auditor◦Financial statements◦Notes to the financial statements
What is an Audit?
StaffExecutive DirectorAudit committeeBoard of Directors
Who hires the auditor?
Information the Organization should include:◦ Background of the organization◦ Services to be performed◦ Personnel to contact for more information◦ Timing for completion◦ Prior financial statements and management letter
Responses from CPA firms should include:◦ Experience with not-for-profit organizations◦ Experience with related entities◦ Staff continuity and turnover experience ◦ Identify the engagement team◦ Audit approach◦ Fee◦ Standard billing rates◦ References◦ Differences from competition
Request for Proposal
Scope of work Timetable Estimate of fees Process for change in scope of workPayment termsAssistance to be provided by
organization personnel
Engagement Letter
Schedule interim procedures Completion of confirmations Develop list of schedules for preparation Provide examples of schedules Schedule year end fieldwork Date for providing drafts◦Financial statements◦Management letter◦Communication with audit committee
Process for approval of audit
Audit Timeline
Information usually requested◦Trial balance◦Schedules to support all balance sheet accounts◦Copies of contracts◦Legal representation letters◦Fundraising appeals◦Grant documentation◦Restricted contribution documentation◦Sample of cash receipts and disbursements
Auditor’s information request
Requested schedules not prepared Search for unrecorded liabilities Expense accruals Amounts released from restriction Adjustments◦Organization◦Auditor Proposed Waived
Audit Assistance
Do’s◦Engagement letter◦Provide requested
schedules in advance◦Receive daily updates on
progress◦Provide in writing required
date of completion◦Ask what services would
be considered above audit scope
◦Request an exit conference
Do’s and Don’ts Don’ts◦No engagement letter◦Assemble information day
before auditors arrive◦Assume everything is
progressing well◦Contact auditor day
before board of directors meeting
◦Accept any bill for services from auditor as correct
Request a multi-year price quote Prepare your own financial statements Prepare your own footnotes Prepare all audit schedules Provide key personnel for questions Maintain a file with copies of important documents:
◦ Board of director minutes◦ Leases◦ Notes
Accounting issues Contributions – restricted vs. unrestricted Organization’s policies and procedures Adjusting entries Functional allocation – last step
Ways to Reduce Audit Costs
Questions