Should Your Nonprofit Consider Getting An Independent Audit?

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Not -for-profit organizations are often required to have an independent audit due to the use of grants and federal funds. However even when not required, an audit can be a useful tool.

In small organizations, it is a good idea to have an independent auditor come in to make sure the organization has proper internal controls. Testing internal controls means an auditor dives into your organization’s information to determine operational effectiveness and efficiency while checking financial reporting to ensure compliance with laws and regulations.

Benefits of an audit

Unbiased reporting: Often nonprofit’s have very limited accounting staff. Having a small staff means the employees of a not-for-profit generally work closely together.  Additionally, the staff has to answer to the Board. Having an independent auditor can provide an outside and unbiassed opinion to ensure your organization is utilizing internal controls properly.  It is vital to take advantage of the oversite of the board of directors to ensure proper usage and reporting of funds.

Check Your Method of Accounting: Compliance with proper financial statement presentation can be a serious concern for nonprofits. There are several different methods of accounting which can be used for presenting financial statements. An accountant can help in deciding which basis to use and how to comply with the specific requirements of that basis.

Applying for Grants: If a small not-for-profit organization wants to apply for certain grants, an audit may be necessary or preferred by the grantor. If this is the direction your organization would like to go, you should consult with your accounting firm to discover your next steps.

 Internal vs. Independent Audit

Often, in an effort to save money, an organization will opt to perform an internal audit.  While internal audits conducted by those inside your organization can be helpful for promoting fiscal responsibility, these individuals do not have the extensive training of an experienced auditor.  In addition to training and expertise, an independent auditor’s testing is not hindered by too close of a relationship with employees and management.

Hiring an independent auditor provides and peace of mind that finances and processes are in order. A nonprofit organization is usually formed to support a sector of the community and they receive many tax benefits.  To help you maintain this tax-exempt status, the Avizo Group has employees that specialize in not-for-profit audit and tax who are great resources.


Treya Tindal, CPA - Senior Analyst

A Senior Accountant who has been with our firm for three years, Treya primarily works in audit but knows her way around a tax return too! She also leads our Project 40 Committee, which preserves our work-life balance initiatives.
Email Treya with any questions.

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