5 Questions to Ask Your Auditor
What are the key questions to ask an independent auditor?
Nonprofits are required to obtain an audit or review each year, depending on their budget size. The first step in any nonprofit audit or review is contacting an independent auditor to begin drafting a management letter. This auditor is likely a Certified Public Accountant or CPA. If this is the first time you’ve gone through the audit process, there are a few things you should consider.
Below, please find a list of 5 questions to ask your potential auditor, or CPA, before hiring them.
1. Can you provide a list of references? One of the first things to ask a CPA is for a list of references of other tax-exempt charitable clients. Asking for this list will give options on other clients to contact and give their feedback about the CPA and the audit process. This will help you discover if a CPA audits similar nonprofits. Not all auditors have nonprofit experience, so reaching out to similar organizations for their audit contact information is also a good place to start.
The tax-exemption status offers benefits to individual donors with an incentive that could encourage your donor base to consider giving more.
2. Can you provide a request for a proposal? When requesting a proposal from a CPA, the objectives and scope of the audit should be clear. The time it takes for a CPA to get this proposal back to you could also help inform your decision.
3. Who would I be working with? When approaching a firm, it is a good idea to ask for the availability and technical experience of the staff member you would be working with. If you know the CPA you are interested in working with, asking for a resume could also be beneficial as you’re making your choice.
4. How much will this cost? This question could make or break your decision, as the price for audits varies state by state and accountant to accountant. Larger organizations would need a full audit, which is more expensive and requires more documentation than that of a review. With all these variables, it is important to iron out what is required of your organization and how much it will cost.
5. What is the audit process like? Some audit firms require in-person office visits to gather documentation; others are completely remote. Getting a feel for what the process would look like can help you choose a model that fits with your organization’s practices.
Annual audits are a vital part of each nonprofit organization. This puts emphasis on vetting and selecting the best auditor for our practices. This list of questions can help put your organization on the right track to a successful and smooth audit process.
NEXTSTEPS | 1.14.21
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