Selecting the right audit firm is an important decision for your nonprofit. Many organizations may be required to undergo annual audits by their state’s Charitable Solicitation License requirements, their loan agreements, grant agreements, or other contractual obligations. Auditors not only provide an opinion on the material accuracy of your financial statements, but they also suggest ways to strengthen your internal controls. Strong internal controls are important to preventing and detecting significant errors and they help to deter fraud and misappropriation. When you choose the right audit partner, the audit process can be less stressful. Here’s how you can choose the best audit firm for your nonprofit’s needs.
1. Understand What an Audit Really Does
There’s a common misconception that auditors are there to find fraud or provide financial advice. In reality, an audit is designed to verify that your financial statements are materially accurate and comply with generally accepted accounting principles (GAAP). They do not dig into every transaction or help you make management decisions.
Think of it like this: If you had a $10,000 credit card bill, an auditor would review a sample of transactions, ask for receipts, and confirm whether the bill is accurately recorded —for example, ensuring that personal expenses aren’t included. This process helps ensure the right controls are in place to minimize fraud risk and protect the organization’s financial integrity.
2. Look for Experience with Nonprofits
Nonprofits operate differently than businesses, and you need an auditor who understands those differences. Look for a firm with experience in nonprofit audits—one that is familiar with their unique accounting rules, IRS requirements, and the specific challenges they face.
3. Ensure They’re Tech-Savvy
Technology is a major part of today’s audit process. Your audit firm should be familiar in the accounting software you use, whether it’s QuickBooks, Sage Intacct, another system or integrated applications. Your auditors should also be comfortable with compliance automation platforms that help streamline the audit process. Auditors who leverage technology can streamline the process, reduce errors, and make document submission more efficient.
4. Check Their Reputation and References
Don’t just take an audit firm’s word for it—ask other nonprofits about their experience. Ask for references from organizations they’ve worked with. Hearing from others about their experiences can help you gauge whether a particular audit firm is the right fit for you. Positive feedback from other nonprofits ensures that the firm has the experience and dedication necessary to handle your audit with care.
5. Understand Fees and Budget Compatibility
While price shouldn’t be the only factor in your decision, it is important to ensure the firm’s fees align with your nonprofit’s budget. Some audit firms may offer lower fees but may lack nonprofit expertise. Make sure you get good value for your investment, considering both cost and quality.
6. Look for a Cultural Fit
The audit process can be time-consuming and requires close collaboration with your team. It’s important to work with an auditor who understands your nonprofit’s culture and values. A firm that respects and aligns with your nonprofit’s mission will be more effective at working with your staff and helping you achieve your goals. Look for a firm that treats you as a partner, not just a client.
7. Strike the Right Balance: Long-Term Relationships & Auditor Independence
An audit isn’t just a one-time event—it’s part of your nonprofit’s financial journey. Building a strong, long-term relationship with an audit firm can make the annual audit process smoother, but it’s also important to maintain a fresh perspective. That’s where auditor independence comes in.
Did you know that publicly traded companies are required to rotate their lead auditors every five years? While nonprofits don’t have the same legal requirement, it’s still a smart practice to switch up your lead auditor from time to time. A fresh set of eyes and diverse experiences can uncover previously unnoticed areas of risk.
The Power of a PBC Checklist: A Tool to Help You Choose the Right Firm
After selecting your audit firm and scheduling the audit, you’ll receive a PBC (Prepared by Client) checklist to help guide your preparation. This checklist outlines all the documents and information your auditors will need to conduct a smooth audit. It serves as a roadmap to ensure your nonprofit is fully prepared and that the audit firm has everything they need to complete their work efficiently.
Not sure where to start with your PBC checklist? We’ve created a detailed guide to the PBC checklist that you can use to help streamline the process and make sure you’re ready for the audit.
Let Us Help You Find the Right Fit
At Chazin, we have a network of trusted audit partners who make the audit process as smooth and stress-free as possible. Our audit partners understand the unique challenges nonprofits face and have the experience to guide you through the audit process with ease. Whether you need help compiling your PBC checklist or are simply looking for a firm with nonprofit expertise, we’re here to help.
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Chazin
With over 20 years working exclusively with nonprofits, we pride ourselves in having a unique understanding of nonprofit accounting needs. We believe that nonprofits deserve personalized, quality service and should not settle for a one-size-fits-all approach. We collaborate with you to provide a fully virtual and customized solution that is not only cost-effective but also strengthens your accounting function. We offer a team of industry experts at your disposal to provide advice, leading technology, and to supplement existing staff to improve efficiency and compliance.