Many successful foundations/nonprofits out there are big enough to need an audit. How do you know when this should occur? Do you know the questions you should be able to answer on such details as board size, committees, board meeting formats, contents of the minutes, and duties of your officers?
Bob Harris, CAE in Florida says “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. A 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. Usually 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.”
Jack Siegel (lawyer, accountant, management consultant, and computer whiz) has a great style about his writing – pointing out quirky stories and idiosyncrasies that we should all be aware of on an interesting blog called Charity Governance Consulting, LLC (go to http://www.charitygovernance.com). The blog is full of great and useful information on charity governance and to keep your nose clean. Take a look at their online educational power point called 101 Questions for your Consideration on Nonprofit Governance, Financial Controls, and Safeguards found at www.charitygovernancelaw.com/Courses/101%20Questions%20for%20Your%20Consideration/player.html.
OK – so it’s something for those of us with high aspirations should read now – rather than later.
Bob Harris has some tips on how to get ready for such a visit, “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: