Making an Annual Audit Plan
As a 501c3 nonprofit organization, you are not required to pay federal taxes on your revenue. Instead, you can reinvest those funds back into your organization and its mission! However, that doesn’t mean that you are exempt from an annual audit.
There are no all-encompassing federal annual audit for nonprofit organization requirements; however, states, grantors, and your own bylaws may necessitate audited financial statements.
So where do you start?
Good Steward Financial Company is your go-to nonprofit financial expert. We specialize in 501c3 nonprofits, and we are here to help you navigate everything related to your nonprofit organization’s finances, including:
- Annual audits for nonprofit organizations
- Full-service bookkeeping and accounting
- Cash flow management
- Payroll processing
- Fractional CFO services
- QuickBooks services
Let’s explore what your annual filing requirements for nonprofit organizations look like and how we can help you craft your annual audit plan.
What is an Annual Audit?
An annual audit involves a licensed financial professional confirming the accuracy of your nonprofit’s bookkeeping and financial records.
There are a few reasons why your organization may face annual filing requirements for nonprofits:
- Organizations that receive over $750,000 in federal funding are required to conduct annual audits
- Your bylaws may require regular nonprofit audits to ensure your nonprofit’s fiscal health.
- Different states have different annual filing requirements for nonprofits, especially for larger nonprofit organizations. Consult with a professional to see whether your organization meets any of them.
- Grantors often want to know the state of your nonprofit’s finances before awarding you funds, which may require audited financial statements.
Even though you may not have any official audit for nonprofit organization requirements, regular nonprofit audits are important for your short-term and long-term fiscal health.
The benefits of annual audits include:
- Added value to your organization
- Actionable insights into your finances and financial processes
- Ensured accuracy and compliance
- Organization transparency
- Better employee accountability
- Improved reputation among donors, grantors, etc.
How to Prepare for Your Nonprofit Audit
The first step to preparing for your nonprofit audit is choosing whether the audit will be internal (completed by your own staff) or external (completed by a financial professional outside of your organization).
Even if your nonprofit has the resources for a dedicated financial team, regular external audits from trusted professionals like Good Steward Financial Company are still a good idea.
An objective outside perspective is essential to ensuring accuracy and providing insights into optimizing your nonprofit’s finances.
Once you’ve selected your auditor, follow these steps:
- Make sure all your accounts are reconciled and that balances are up-to-date.
- Address uncleared transactions.
- Ensure that none of your vendors have negative or zero balances.
- Collect outstanding payments from members, patrons, etc.
- Deposit any undeposited funds.
- Review capitalization.
- Check accounts receivable and payable.
- Check all financial records for errors.
- Turn over all required documents to the auditor so that they can begin the audit.
- After the audit, review the information and take any necessary steps.
It is best to keep up with these records throughout the year, not just when you’re preparing for an annual audit, and if you don’t have the team to do that, you may want to look into hiring a professional full-service bookkeeper.
Annual Audit for Nonprofit Organizations with Good Steward Financial Company
At Good Steward Financial Company, we are proud to offer superior annual audit assistance, ensuring that your nonprofit audit is conducted effectively and efficiently.
Our annual audit experts will work closely with you and your CPA to help you prepare your records for an audit, conduct the audit, and interpret the results so that you understand how your organization can be improved.
With Good Steward Financial’s annual audit assistance, you will build sustainable financial practices that add value to your organization, improve your reputation, and ensure long-term viability.
Contact us today to develop your annual audit plan!