An annual audit is one of the most significant responsibilities of for-profit organisations, as they have to show their operational transparency to the authorities and pay tax accordingly. On the other hand, non profit organisations have an edge in the scenario as they receive numerous tax benefits. The main reason behind this is that they do not want pocket profits but utilize them for the welfare of needy segments of the society.
Besides all this, nonprofits organisations also have to conduct an audit on an annual basis. It is because donors provide them more than necessary financial support to fulfill their cause. They have an equal right to ask and check if their funds and help are being utilized fairly or not. So, an audit can highlight the transparency of organisations, too, which is extremely important.
Keep scrolling down this article to explore the nonprofit organisation audit checklist you should follow to carry out the procedure effectively.
Top 8 Points Checklist To Follow for the Audit of Non Profit Organisations
The audit of the nonprofit organisation is slightly different from that of a profit-based organisation because of the taxation matters. So, if you run or manage a nonprofit firm, you need to pay attention to all the little details and ensure a smooth audit procedure. You can easily stick to an audit checklist to achieve this goal.
Here are the top checkpoints you can follow to conduct an audit of a non profit organisation.
1) Review Accounting Practices
Accounting practices are the backbone of any organisation, and reviewing these practices is the backbone of the audit process. This is the first checkpoint nonprofits need to mark to ensure all their accounting practices are ethical and in place. The internally appointed leaders can also commit fraud, so most organisations trust and hire the top audit firms in Dubai and let the professionals take charge of the procedure.
2) Evaluate Financial Reports
After reviewing the accounting practices of the nonprofit organisation, the next checkpoint for a smooth audit procedure is evaluating the financial reports. Checking the financial reports is important to ensure that there are no financial errors. And the status is also being shared fairly with the donors, stakeholders, and employees of the organisation to maintain a transparent and reliable establishment.
3) Analyze Management of Contributions
Nonprofits have a huge responsibility and immense pressure of utilizing the contribution of donors in an ethical and transparent manner. So, the next checkpoint for a smooth audit of the nonprofit organisation is analyzing the management of contributions. The auditors will need to pay specific attention to income funds and utilized funds, and the ways and procedure of their utilization.
4) Test Internal Controls
One of the most critical checkpoints for the nonprofit audit is testing the internal controls of the organisation. Ensuring that the organisation has set the controls and sticks to them is critical to assess the transparency and fairness in the operations of the organisation. The audit report can also highlight the strengths and weaknesses of internal control to improve the situation.
5) Evaluate Risks
Another critical checkpoint for the audit of nonprofits is evaluating the risks. These risks can be associated with donors, stakeholders, leadership, internal processes, and policies. Ensuring a smooth setup for the organisation while evaluating and managing the risks is critical for audit.
6) Check Cash Flow Projections
Another important audit checkpoint is checking the cash flow projections. It can include the cash flowing in and out of the organisation, in addition to assessing the means of these ins and outs. Ensuring that the cash flow is free of any suspicious activity is one of the major responsibilities of auditors.
7) Review Policies and Procedures
One of the most critical checkpoints for the nonprofits audit is reviewing the policies and procedures of the organisation. At times, the fraudulent organisations include some overly complicated clauses in their policies that help them pocket extra funds and utilize them against the purpose. So, checking for such policies and holding the authorities accountable is inevitable.
8) Manage Results and Reporting
The last checkpoint you should follow to conduct a smooth audit is managing the results and reporting. Getting the results is not just enough. You need a report highlighting the strengths, weaknesses, challenges, and areas of improvement, which only professionals can do. So, hire experts and manage the audit report and results to manage your organisation better.
Trust The Professional For Non Profit Organisation Audit!
If you are managing a nonprofit organisation, you have the responsibility of managing the funds and supporting the deserving communities fairly. Getting an audit cannot only boost the quality of your operations but improve your reliability among the donors too. So, contact the professional auditors now to ensure transparency of your operations and increase the scale of your welfare activities.
A Complete Guide To Zero-Rated And Exempted VAT in UAE
How Technology in Accounting is Transforming The Businesses