Fietsen Wim De Glas

State of Oregon: Business Nonprofit Services

audit guide for small nonprofit organizations

Books must be closed and all work papers ready for review—any delay on the client-side delays the entire audit process. Additionally, auditors may wish to conduct private interviews with various organization members during this time—set aside an office or smaller meeting room for them. Designate staff members to be available for these requests and either fulfill them or carry the request to the appropriate person. Regardless of where you are in the audit process, you should expect ongoing communication. Clear and timely communication between the auditor and the client (the NFP organization) helps the audit process proceed efficiently and smoothly.

  • The operation and maintenance expense category should also include its allocable share of fringe benefit costs, depreciation, and interest costs.
  • (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
  • However, certain state and federal government agencies do require audits on a more regular basis, depending on the size of your organization and your spending.
  • Each Indian tribal government desiring reimbursement of indirect costs must submit its indirect cost proposal to the Department of the Interior (its cognizant agency for indirect costs).
  • The amount is generally included in the bylaws and constitution and is approved by a secret ballot vote of the membership.
  • Also, the non-Federal entity must not preclude potential bidders from qualifying during the solicitation period.
  • (2) Depreciation on buildings used for more than one function, and on capital improvements and equipment used in such buildings, must be allocated to the individual functions performed in each building on the basis of usable square feet of space, excluding common areas such as hallways, stairwells, and rest rooms.

However, because of the wide diversity of recordkeeping systems used by international and national unions and their affiliates, it is not possible for OLMS to precisely define what records must be maintained by every union. At this point, your union’s members and parent body probably want to know what the general financial condition of your organization is, whether your audit disclosed any problems and, if so, how they were resolved. If your union has standard forms to document your work and report your findings to the membership, fill them out.

What is the process for a nonprofit audit?

See also the definitions of equipment and general purpose equipment in this section. Real property means land, including land improvements, structures and appurtenances thereto, but excludes moveable machinery and equipment. (4) Questioned costs are not an improper payment until reviewed and confirmed to be improper as defined in OMB Circular A–123 appendix C. (4) The term “loan guarantee commitment” means a binding agreement by a Federal awarding agency to make a loan guarantee when specified conditions are fulfilled by the borrower, the lender, or any other party to the guarantee agreement. Loan means a Federal loan or loan guarantee received or administered by a non-Federal entity, except as used in the definition of program income in this section.

Pre-applications, letters of intent, or white papers required or encouraged (see Section D.4), including any limitations on the number of pages or other formatting requirements similar to those for full applications. (d) The auditor did not report a substantial doubt about the auditee’s ability to continue as a going concern. (ii) When significant parts of a Federal program are passed through to subrecipients, a weak system for monitoring subrecipients would indicate higher risk. (2) Federal programs not labeled Type A under paragraph (b)(1) of this section must be labeled Type B programs. (iv) Promote the Federal awarding agency’s use of cooperative audit resolution mechanisms. (2) May assume all or some of the responsibilities normally performed by a cognizant agency for audit.

External Audit

In the monthly per capita tax report shown below, Factory Workers Local 888 is submitting a late payment (in September 2000) for its June 2000 per capita taxes. Unions also retain fixed assets like buildings, automobiles, computer equipment, and furniture. In addition to inventories of fixed assets showing their original cost, estimated current value, or book value, unions should also retain various documents showing ownership of these assets, such as property deeds, mortgage payment statements, car titles, and equipment warranties. These documents should be kept in a secure place, such as a safe deposit box at the union’s bank.

audit guide for small nonprofit organizations

That’s why our in-house team of 6 former nonprofit auditors helped put together this guide to nonprofit audit checklist to make sure  your audit goes as smoothly as possible. Your organization’s development team assigns an audit committee to perform internal audits. Internal audits are better than nothing but don’t necessarily increase public transparency and accountability—since an internal team could be the root of the problem. Donors need to trust an organization before they contribute a one-off gift or recurring funding, and an independent audit provides them with that much-needed reassurance. Nonprofit audits might sound intimidating, but they are far less scary than you think.


(2) To provide for continuity of cognizance, the determination of the predominant amount of direct funding must be based upon direct Federal awards expended in the non-Federal entity’s fiscal years ending in 2019, and every fifth year thereafter. (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. (9) Other referenced provisions of this part unless contrary law firm bookkeeping to the provisions of this section, a program-specific audit guide, or program statutes and regulations. (b) Any nonprofit organization that had biennial audits for all biennial periods ending between July 1, 1992, and January 1, 1995, is permitted to undergo its audits pursuant to this part biennially. The cumulative balance of Federal awards for endowment funds that are federally restricted are considered Federal awards expended in each audit period in which the funds are still restricted.

audit guide for small nonprofit organizations

The ceiling indirect cost rates or the indirect cost rates cited in grants or agreements, whichever is lower, will be used to determine the maximum allowable indirect costs on the grants or agreements. Reimbursement of indirect costs are subject to the submission of an indirect cost rate proposal, availability of funds, statutory and administrative restrictions, and the approval of the USAID Grant Officer or authorized representative. This is a statutory requirement under section 872 of Public Law 110–417, as amended (41 U.S.C. 2313). As required by section 3010 of Public Law 111–212, all information posted in the designated integrity and performance system on or after April 15, 2011, except past performance reviews required for Federal procurement contracts, will be publicly available.