2. How to Choose an Auditing Firm

3. Do you need an audit and why?
Presbyterian Church (U.S.A.) Book of Order “A full financial review of all financial books and records shall be conducted every year by a public accountant or committee of members versed in accounting procedures. Reviewers should not be related to the treasurer(s).”

4. Do you need an audit and why?
Do you have a bank loan that has a covenant requiring an audit?
Are you anticipating a new building/fund-raising campaign in the near future?
Do you receive any private grants or Foundation grants?
What is the size of your church?
Would this be a best practice?

5. Benefits of an Audit
Provides the highest degree of assurance to financial statement users
Provides reasonable assurance that the financial statements are not materially misstated and are in conformity with generally accepted accounting principles (GAAP)
The purpose of GAAP is to promote consistency and fairness in financial reporting
Enables a nonprofit organization to apply for grants from agencies that require audited financial statements
Provides reliable information for bankers and other creditors
Part of the audit includes an evaluation of the accounting control system on which to plan and perform the audit

6. Benefits of an Audit
Gives a measure of comfort to the congregation/presbytery/synod
Requires an annual cleanup of the books and records
Helps stay up-to-date on tax, accounting, and legal issues
An annual audit produces a management letter

7. Financial Checkup
“Audits are like yearly medical check-ups — you probably don’t look forward to them, but you (and your organization) are healthier for them in the long run.” Abigail White

8. The Proposal Process Request for Proposal Auditor Interviews
Proposal Evaluation
Auditor Selection

9. What to include in the Request for Proposal
Communicate the facts and conditions surrounding the engagement to be completed
Staff size
Qualifications of personnel performing accounting functions
Revenue sources
Typical monthly number of and amounts of cash receipts and disbursements
Copies of the most recent financial statements
Copy of the current budget
Identify governing board members and management (avoid conflict of interest)
Timing requirements
Work and reporting requirements
Guidelines for submitting proposal

10. Where to Find a CPA
State society of CPAs, which may have a referral service
Attorneys, bankers, and other professionals
Governing board members
Other nonprofit organizations
Funding sources, such as foundation or other major contributors
Community organizations

11. What to expect from the Auditor’s Proposal
Executive summary
Profile of the firm
Scope of the engagement
Approach to the engagement
Biographies of the engagement team
Comparable experience/clients
Fee estimate

12. Auditor Interview Guide
Firm characteristics
Continuity of staff
Audit execution
How audit is planned and scheduled
Approach to working with management
Firm’s experience
Peer review

13. Proposal Evaluation Conflict of interest or potential independence
Sufficient experience in serving similar organizations
Pricing fall within the budget
Timeline consistent with the needs

14. Other Options/Other Engagements
Financial statement review
Financial statement compilation
Agreed upon procedures engagement
Consulting engagement

15. Nonprofit Auditor Selection Guide
Quest
Helpful Website: The Wallace Foundation
Nonprofit Auditor Selection Guide
Includes a request for proposal template
Auditor interview guide
Applicant assessment guide

16. Questions?