If it’s true that people really get what they really want, then nonprofits get the audits they want. That can be great or terrible.
During the AICPA Not-for-Profit Industry Conference, Frank Kurre, national managing partner of Grant Thornton’s Not-for-Profit Industry Practice, and Donna O’Brien, president of Community Healthcare Strategies, offered advice for audit committees.
They said the audit committee’s primary role is to instill confidence that the organization’s financial and tax status, internal controls and compliance procedures allow it to fulfill its mission and achieve long-term viability. Toward that end, there are two main guiding principles: Accountability and Independence.
The accountability is to stakeholders, to donors, to grantors, to organizations that provide financing and to people who use the resources of the organization. It’s also to society at large, which grants tax exemptions to recognize the societal value of the services the organization performs.
The audit committee must be independent of both management and the external auditors. Internal auditors must be independent of management and must be able to report findings directly to the audit committee.
The external auditor’s opinion on the financial statements must be based only on its independent financial judgment, without improper influence from management.
Board members and management must be independent from vendors, or, at a minimum, disclosure and recusal used.