Presented By: W. Andrew Powell, CPA Principal Halt, Buzas & Powell, Ltd.

 What does an audit really mean  Do you need an audit  Who hires the auditor  Request for proposal  Engagement Letter  Audit timeline  Auditor’s information request

 Governmental funding  Donors  State charitable registration  Paid fundraiser  Board of Directors  Other types of service ◦ Compilation ◦ Review ◦ Agreed upon procedures ◦ Program specific services

 Process for testing the accuracy and completeness of information  Allows a CPA to issue an opinion  Includes: ◦ Cover letter signed by the auditor ◦ Financial statements ◦ Notes to the financial statements

 Staff  Executive Director  Audit committee  Board of Directors

 Information the Organization should include: ◦ Background of the organization ◦ Services to be performed ◦ Personnel to contact for more information ◦ Timing for completion ◦ Prior financial statements and management letter  Responses from CPA firms should include: ◦ Experience with not-for-profit organizations ◦ Experience with related entities ◦ Staff continuity and turnover experience ◦ Identify the engagement team ◦ Audit approach ◦ Fee ◦ Standard billing rates ◦ References ◦ Differences from competition

 Scope of work  Timetable  Estimate of fees  Process for change in scope of work  Payment terms  Assistance to be provided by organization personnel

 Schedule interim procedures  Completion of confirmations  Develop list of schedules for preparation  Provide examples of schedules  Schedule year end fieldwork  Date for providing drafts ◦ Financial statements ◦ Management letter ◦ Communication with audit committee  Process for approval of audit

 Information usually requested ◦ Trial balance ◦ Schedules to support all balance sheet accounts ◦ Copies of contracts ◦ Legal representation letters ◦ Fundraising appeals ◦ Grant documentation ◦ Restricted contribution documentation ◦ Sample of cash receipts and disbursements

 Requested schedules not prepared  Search for unrecorded liabilities  Expense accruals  Amounts released from restriction  Adjustments ◦ Organization ◦ Auditor  Proposed  Waived

 Do’s ◦ Engagement letter ◦ Provide requested schedules in advance ◦ Receive daily updates on progress ◦ Provide in writing required date of completion ◦ Ask what services would be considered above audit scope ◦ Request an exit conference  Don’ts ◦ No engagement letter ◦ Assemble information day before auditors arrive ◦ Assume everything is progressing well ◦ Contact auditor day before board of directors meeting ◦ Accept any bill for services from auditor as correct

 Request a multi-year price quote  Prepare your own financial statements  Prepare your own footnotes  Prepare all audit schedules  Provide key personnel for questions  Maintain a file with copies of important documents: ◦ Board of director minutes ◦ Leases ◦ Notes  Accounting issues  Contributions – restricted vs. unrestricted  Organization’s policies and procedures  Adjusting entries  Functional allocation – last step