As the fiscal year for nonprofits and government entities has ended, financial statements are being prepared and we must be reminded of the integral role stakeholders play in the success of our organizations. Part of keeping stakeholders happy and invested in the success of your company includes providing them with detailed documentation as to the financial well-being of your business. One obvious way to prevent discrepancies within those reports is by having an annual audit performed. We recommend as a best practice that you fold an annual audit into your standard operating procedure. However, it is important to remember that the quality of the audit you procure is just as important as ensuring the audit occurs at all.
By undergoing an independent audit, you are providing a strong level of confidence in your financial integrity and demonstrating your ability to uphold your fiduciary responsibility. Not only will this help your organization with optics, but it can also identify some real disparities in your accounting, which if found early enough can be remedied so you avoid any interruption in funding. Quality audits can also help reduce the risk of future non-compliance by creating an airtight repertoire among donors, stakeholders, and taxpayers. This, in turn, strengthens your ability to secure funds moving forward.
However, not all independent auditors are equal. There are a few standards of achievement that should be taken into consideration when choosing an independent auditor. For example, you should only hire knowledgeable, experienced firms that have a proven track record of successfully completing compliance audits with organizations like yours. You can also determine their effectiveness by researching peer reviews and by confirming their participation and membership in accredited, quality improvement programs. A good rule of thumb is to ‘audit’ their credentials before you hire them to audit your financials.
Although the fiscal year has ended, it’s not too late to hire a firm to do full financial statements and compliance audits. A high-caliber audit helps show that your company is in compliance with the regulations governing the financial assistance you receive and works to further your investors’ and taxpayers’ confidence in you. Overall, this only serves to strengthen your financial security.