the camp audit “keep your friends close and your auditor closer”
TRANSCRIPT
The Camp Audit
“Keep your friends close and your auditor closer”
Topics for Discussion
• Determining the need for an audit• Other levels of reporting by CPA’s• Hiring the auditor• The RFP process – interview and selection• Audit Process – before, during and after• Issues that may arise• Other requirements
Determining the Need for an Audit
• Audit - express an opinion on financial statements based on sufficient and appropriate audit evidence
• Usually required by a third party– Government agency, funding source, banking
relationship, internal board oversight• Some situations may not require an audit
Other Levels of Reporting by CPA’s
• Review reports - A review is substantially less in scope than an audit and does not express an opinion.
• Compilation reports - do not express an opinion or provide any assurance.
• Tax filing preparation• Consulting reports
Hiring the Auditor
• Typically done via a Request for Proposal (RFP)• RFP solicits responses from several possible
audit firms• Responses are reviewed by management and
Board of Directors• Final interviews are conducted• Selection is typically made by the Board
The RFP Process
• Request summary of industry experience with other similar organizations
• Outline end product requested: audited financials, Form 990, meetings with Board and Committees, any specific third party (government) requirements
• Request references• List of engagement staff and their credentials and
training
The RFP Process
• Request confirmation of licensing in the state you are located
• Request a copy of the audit firm’s most recent Peer Review Report
• Outline time line and due date for all commitments
• Outline fee arrangements and consider multi-year commitments
Interview and selection
• Discuss the firm’s relevant experience• Discuss the firm’s philosophy for communication
with management and the Board• Involve members of the Board and management in
the selection process• Make sure you have enough lead time before your
year end because a change in auditors requires time and effort for all parties involved
Planning the Audit
• Meet with the firm selected to plan out a timeline and select fieldwork and meeting dates
• Read and sign an engagement letter (contract)• Have the auditor provide a list of documents for the
Camp accounting staff to have prepared in advance• Make sure the preparation gets done in advance
During the Audit
• Make sure Camp staff have time available to meet the auditors needs while they are on site
• Be ready to respond to additional requests during audit field work
• Suggest an exit conference with the audit team to review and update timeline and “to do” list
Wrap Up and Conclusion
• Be sure to review and discuss drafts of the financial statements that the auditors will provide – see sample
• Schedule meeting dates with the Committees and the Board to provide time for questions and possible changes to reports
• The Board will approve the financial statements once agreed to and presented by the auditors
Issues That May Arise
• Audit adjustments to the financial statements• Preliminary results may not match final results• “Going concern” issues – if the Camp has a
difficult financial situation
Other requirements
• Any specific third party reports – may be government reports
• Preparation and review of tax form 990 – typically also prepared by audit firm
• Board review and approval required• A few words on Form 990 T
Standard Audit ReportINDEPENDENT AUDITORS’ REPORT
To the Board of Directors ofABC Organization
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Organization (a nonprofit organization), which comprise the statement of financial position as of June 30, 20X1, and the related statements of activities, functional expenses, and cash flows for the year then ended and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Organization’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Organization’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Standard Audit Report Continued
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Organization as of June 30, 20X1, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Report on Summarized Comparative Information
We have previously audited the Organization’s 20X0 financial statements, and our report dated October 2, 20X1, expressed an unmodified opinion on those audited financial statements. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 20X0, is consistent, in all material respects, with the audited financial statements from which it has been derived.
City, StateReport Date
Statement of Financial Position
20X1 20X0
ASSETS
Cash and cash equivalents $ 29,907 $ 15,655
Unconditional promises to give 198,188 190,304
Accounts receivable 4,635 1,355
Prepaid expenses 6,402 8,845
Long-term investments 64,875 13,282
Property and equipment 648,410 664,342
TOTAL ASSETS $ 952,417 $ 893,783
20X1 20X0
LIABILITIES
Accounts payable $ 6,291 $ 3,445
Accrued expenses 4,284 8,145
Notes payable 79,991 85,930
TOTAL LIABILITIES 90,566 97,520
NET ASSETS
Unrestricted 362,857 356,166
Temporarily restricted 492,125 435,932
Permanently restricted 6,869 4,165
TOTAL NET ASSETS 861,851 796,263
TOTAL LIABILITIES AND NET ASSETS $ 952,417 $ 893,783
Statement of Activities Temporarily Permanently Total
Unrestricted Restricted Restricted 20X1 20X0
Revenue and support Government contracts $ 1,265,431 $ - $ - $ 1,265,431 $ 1,062,785 Contributions and special events 400,301 64,823 2,704 467,828 362,791 Grants 53,879 13,751 - 67,630 65,430 Services and fees 21,652 - - 21,652 26,753 Other revenues 5,674 - - 5,674 4,568
Net assets released from restrictions 23,756 (23,756) - - - Total revenue and support 1,770,693 54,818 2,704 1,828,215 1,522,327
Expense Program 1,230,421 - - 1,230,421 943,376 Management and general 467,935 - - 467,935 443,991 Fundraising 82,364 - - 82,364 79,212
Total expense 1,780,720 - - 1,780,720 1,466,579
Change in net assets from operations (10,027) 54,818 2,704 47,495 55,748
Investment income, net 16,718 1,375 - 18,093 15,314
Change in net assets 6,691 56,193 2,704 65,588 71,062
Net assets, beginning of year 356,166 435,932 4,165 796,263 725,201
Net assets, end of year $ 362,857 $ 492,125 $ 6,869 $ 861,851 $ 796,263
Howard Cheney, [email protected](413) 322-3491
Melyssa Brown, [email protected](413) 322-3484
Thank You!