What is an Independent Audit?
Certain nonprofits are required to undergo an independent audit on an annual basis. An independent audit is needed if requested by a federal, state, or local governing body, if your nonprofit has more than $750,000 in federal expenditures, or as a condition of receiving a loan or grant. An Independent audit provides a professional opinion of a nonprofit organization’s financial statements, attesting that they are fairly presented and in accordance with generally accepted accounting principles (GAAP). An independent audit gives reasonable assurance about whether the financial statements are free of material misstatements.
What Happens with an Independent Audit?
When an audit takes place, the CPA will perform procedures to obtain audit evidence about the amounts and disclosures in the financial statements. Independent audits aren’t designed to find fraud. An independent audit will evaluate the organization’s internal control systems as a basis on which to plan and perform the audit. Once completed, your Certified Public Accountant issues a report which states their opinion on your financial statements, including your balance sheet, statement of support, revenue, expenses, and statement of functional expenses.
How Do I Obtain an Independent Audit?
An independent audit should not be confused with an IRS audits. An audit is conducted by an independent Certified Public Accountant who is hired and paid to perform procedures to obtain evidence about the amounts and disclosures in your organization’s financial statements to the effectiveness of your internal controls.
Do I Need an Independent Audit?
The decision to obtain an independent audit is often straightforward, as you are typically either required to do so by the federal Office of Management and Budget (OMB) once a year or receive a request from a governmental organization, lender or grantor to provide one. For nonprofits that have smaller incomes and budgets or that engage in a relatively low amount of transactions per year, an audit may not be necessary.
At The Baird Audit Group, we strive to make your independent audit effortless and trouble-free. Our company is a full-service firm that is with you from the audit planning stage to the preparation of the financial statements, to the follow-up report assuring that all issues have been resolved. Contact us today by calling 706-855-9500 or online HERE to find out more about our comprehensive audit services.