Marc A. P.
Author of "Ask Without Fear!," speaker, & nonprofit fundraising trainer, founder FundraisingCoach.com
Nonprofits, how often do you change auditors?
Some nonprofits seem to change auditors every 3 years, others never change.
What does your organization do? Do you even get an annual audit?
Answers (21)
Bryan C W.
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We have not changed and we do have a "Review" done yearly...
The need to change would have to be based on some performance issue or unexplained/unsupported increase in charges.
Karen G.
Director Career and Member Resources & Director Sponsorship at American Marketing Association
Hello - we are audited every year. We have had the same firm for the last 10 years, however, the team that comes in to do the autid changes from time to time.
Being a start up, we're putting structures in place in 2012 to be ready for our first annual audit in early 2013. We haven't set an official plan in place for changing auditors, but expect we will do something similar to the 3-year change.
Check out Sarbanes-Oxley for Nonprofits by Jackson and Fogarty. Good exploration of issues like Marc's question. I think the key is examining your key contractors (e.g., auditors) regularly. A formal review. A strong strategic questioning process. Then decide. It's not so much about changing as raising the issue of whether the organization should change.
I agree with Simone about doing a serious review to see if it's time for a change, rather than doing a review with an assumption there will be a change. How well is your auditor keeping up with the nonprofit sector? With international accounting changes? How well is your auditor advising the Audit Committee at least, and Board if there are issues? Has the auditor-staff relationship stayed professional, with the auditor remembering he or she works for the board and members not the ED, or has it become too cozy?
When I became an ED, the auditor had correctly identified numerous improvements essential to good financial controls. The same improvements every year. Only the ED saw the management letter! The auditor never met the Treasurer let alone the board. I didn't need much of a review to know a change was essential and urgent in that case.
However, if the engagement is reviewed too frequently, audit firms will up the prices as they don't make their money in the first year or two with a new client. There's a learning curve. I think every four or five years is enough unless there are red flags.
Norman O.
President NFP Consulting Resources, Author/Co-Editor "You and Your Nonprofit"
If you are comfortable with your auditor, have an audit committee or group that conducts oversight, there are no problems or concerns and your auditor is competitive with pricing, what would be a reason for change?
We are a small ($40million in assets) Community Foundation. We are audited by a CPA firm every year. We do an RFP to accounting firms to choose an auditor every three years.
Jerry & Susan S.
Marriage Missionary & CXO of Faithful & True of Jacksonville, FL
Marc,
We just changed Treasurers and have never been audited in our 4+ years.
Our $75,000 budget does not have the room for that function. Our accountant said that it would be pricy to have his firm do it and I'm not sure (with our system of controls) that it is needed, yet.
Our policy is to change every 3-5 years. New auditors ask new questions and keep us at our best, but it's also a lot of work to find a new auditor and bring the firm up to speed.
There is no requirement for nonprofits to change (Sarbanes-Oxley applies to publicly traded companies).
As an auditor, we encourage our clients to evaluate their professional relationships on an ongoing basis as part of their fiduciary responsibility. We encourage our clients and nonclients alike to develop solid relationships with their professional advisors. However, with many nonprofits, every three years can be too short a timeframe as it can take three years to really get to know the client.
As a board member, I am associated with organizations that don't need an audit as well as organizations where an audit is required. In the case of the board with the audit requirement, the board does go out to bid every three years as a matter of policy.
The important thing about going out to bid is that you develop your audit requirements and evaluation criteria and communicate those criteria to the bidders. This way, all bidders will address the areas that are important to your organization.
For anyone associated with a nonprofit going out to bid, we at PFBF, Certified Public Accountants find that we are typically very competitive from a client service, experience, timeliness and pricing standpoint. We appreciate all opportunities to be a part of an organization's bid process. If you find yourself in a position where you are going out to bid and would like an RFP template, we have on that we have developed over the years that may be helpful. Give us a call if you'd like it.
We get an annual audit.
The same company has done our audit for at least 7 years and we have no plans to change.
Marc, Great question...I searched the memory banks of both former employeers as well as Boards I am sitting on or have served on. I've never seen any sheduled changes. There have een changes when admisntrators have changed but thats it. I think it makes sense from an organizations integrety standpoint though to move every once in awhile. Sorry the answer is so vanilla!
D
We are audited annually and have used the same auditors for the past 5 years. I hope this information is helpful.
Susan D.
Director of Development at Asociacion Puertorriquenos en Marcha (APM)
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Yes, we get an annual audit, and this year we were excited to finish the process earlier than ever before, with no exceptions or concerns. We have had our current auditors for at least three years.
Orgs I've been with (and those I advise) get an annual audit or review and then evaluate the firm they use every 3 years or so to make sure their needs are still being met and they're getting market rate. It seems most orgs under $1M can get away with just getting a review as a full audit can cost upwards of 8-12k. Most funders (so far) don't seem to expect a full audit unless you're past that $1M mark.
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The non-profits I have worked for have usually gone with every three years, and I have seen every five years. My current organization changes every three years and yes, an annual audit is extremely important! We have to all offer transparency to our donors and audits can be annoying, but they are essential!!
To my knowledge, we've utilized the services of the same auditors for at least 15 years.............
Clarification added 3 months ago:
And it is done yearly.
we do have an annual audit and from what I've researched we've used the same the group the past few years and plan on sticking with them for this coming one. Of course this is my first time working with them so ask me again come August!
Mark M.
Accounting & Finance Smokejumper, CPA (inactive)
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My former client used Moss Adams, a west coast based regional firm that has considerable experience in Native American governments and corporations.
We went out for bids in 2009, because the annual fee had increased significantly over the past years, but in Moss Adams defense, the client had chosen to be without a Controller for 2+ years and was behind on their BIA et al filings, thus Moss Adams incurred additonal time for schedule prep and analysis. The client was Not a "tick & tie" audit.
For the smaller nonprofits I have seen reviews done.
Smaller nonprofits are generally minimal revenue to CPA firms and are done at cost plus w/ little markup at a service to the community and favor to more profitable audit clients (who are on the board of the nonprofits) at nonbusy season times of the year.
Generally nonprofits switch auditors based upon fees, disagreements on accounting issues, personalities, and/or a new board member prefers another firm.
We chose to stay w/ Moss Adams because they had the historical knowledge of what & sometimes why of what had happened the last 10+ years plus the technical expertise. (The client's staff had 5+ years average experience and were high school and some associate degree grads)
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Marc, we are very consistent on security and audit programs. Business continuity/dr plan, hippa, annual sas 70 type II audit, regular federal examinations, glba risk assessment, pci level 1 complaint ebpp, and extensive internal audit. We don't like to switch. Hope this helps.
Wallace J.
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