A Beginner’s Guide To Not For Profit Audits

An audit is a review performed by an independent organization to review accounting and record-keeping. It usually serves as approval that a non-profit is responsible for handling its financial and other resources. Not for profit audits are often done by certified public accountants. Many countries provide non-profit organizations with favorable rates and special exemptions for their use of telecom and utility services.

However, these benefits don’t usually appear on their bills. Utility services are such as propane, electricity, sewer, natural gas, and waste disposal. Telecom services include cable, cell phones, and the internet.

The Need For Not For Profit Audits

A not for profit organization is to support some group or cause and isn’t familiar with interpreting the codes that appear on its bills. Fortunately, there are people with the appropriate training to perform audits of these organizations’ telecom and utility bills. Statistics say that more than 70 percent of the bills audited have overcharges on them. Nonprofits can give authorization so that an auditor digs through its bills and if any overcharges are identified, the auditor submits the paperwork to get the refunds which are directly sent to the organization.

Some non-profits may be reluctant in pursuing this due to the idea that these audits are expensive. Many utility bill audit companies utilize a contingency-based model. That means the audit costs the not for profit nothing upfront. In case no overcharges are found on the bills, the organization has received a utility bill audit for free. If there are funds that need to be refunded or credited, the nonprofit will share the amount recovered only after getting the payment.

A Not For Profit may include an independent school, historical society, or museum. It may also include a community social service, federal credit union, or outreach group. Many hospitals also fall under this category. So, if you wish to assist a Not For Profit in your community, allow them to know that the program is available.

Benefits Of Having An Internal Audit

  • An internal audit will make sure that financial records follow the generally-accepted accounting regulations.
  • Also, an internal audit can help plan and budget your organization more effectively
  • An audit enhances public relations because it sends a positive image of the organization’s financial integrity to the members of the public.
  • Granting agencies may get the info in the audited financial records useful in assessing an organization that is applying for finances.
  • Suppliers and lenders may require audits before approving credits
  • Some countries require Not For Profit organizations to have independent audits.

The board of directors of an organization is tasked with hiring the auditor and presenting the reports to the board so that it’s addressed there.

Audit Report Content and Functions

An audit report usually contains a cover letter stating the opinions of the auditors and recommendations for the Nonprofit. It also contains the financial statements and any special notes to the statements. These financial statements typically show comparative information from the previous financial year.

There are many functions for an audit and one of them is to uncover any poor practices or irregularities. Any weakness in the manner you handle your finances is appropriately realized before they turn out to be an issue. A proper audit will identify these mistakes and the auditor should help you put corrective steps in place. These include internal controls to safeguard your Organization.

The internal controls are procedures and policies that protect operational efficiency and make sure appropriate use of the available fund. Moreover, they protect against the deliberate misuse of funds.


There are many benefits of Not For Profit Audits as we have discussed above. These include helping in the planning and budgeting of the organization. These audits also help in enhancing the image of the organization in the eyes of the public by sending a positive picture of the organization’s financial transparency.

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