Most not-for-profit organizations rely on a CPA to review and report on financial conditions. A second type of audit is an operations inventory and assessment conducted by staff.
The third type of audit is a comprehensive appraisal of legal affairs and potential liability. It is intended to protect the organization’s volunteer board of directors and staff through preventative maintenance.
An attorney with knowledge of not-for-profit organizations will visit the office and review governing documents, contracts, insurance and common areas of risk. The result will be a discussion and/or report on best-practices and apparent risks.
Because it usually includes an on-site office visit, staff can prepare for a legal audit by pulling the appropriate files to save time and money. Here are the common ingredients of a legal audit:
Not every organization can afford or undertakes a legal audit; use this list to familiarize staff and board with operations and the importance of maintaining proper records.