1. Operations 103 Audits & Reviews, Class 7

2. Today’s Topic This class will examine the relative merits of various types of financial reviews, including annual audits. There are both internal and external audits, and you need to decide which is best for your church. An external audit will provide a Management Letter and there are key items that need to be included in those letters. The role of Audit Committees will be examined, as well as the use of audited statements. Finally, we will look at best practices for preparing for an audit and learning from its results.

3. Vonna Laue Vonna is a partner with CapinCrouse, LLP where she has served since 1996. As an audit partner, Vonna is responsible for audit and accounting services rendered to clients. Her activities include review of audit procedures and processes, interaction with client personnel and the audit team, and involvement in complicated audit areas. Vonna has co- authored the book, Essential Guide to Church Finance. In 2010, she was inducted into the Church Management Hall of Fame. Her speaking experience includes various regional and national conferences.

4. An Audit Without Angst? Vonna Laue, Partner CapinCrouse

5. Agenda Levels of CPA services Why an audit? Before you begin Audit process Tips for a successful audit Management comment letter Audit committee After the audit is complete

6. Levels of CPA Services Compilations – Financial statements are primarily management’s representation. CPAs must make sure they appear to be in compliance with accounting standards. Reviews – CPAs must perform inquiry and analytical procedures to be comfortable that the numbers are correct. Audits – CPAs must perform additional procedures to verify the accuracy of the financial information (highest assurance).

7. Why an Audit? Loan covenants Bylaw requirement Denominational necessity Accountability

8. Before You Begin Do you need an audit? Review Consulting arrangement Do you need a new auditor? Selecting an auditor Send a request for proposal (RFP) Choose the firm Sign an engagement letter

9. Audit Process Preliminary fieldwork Auditor brainstorming and communication with board or audit committee Final fieldwork Approve drafts of financial statements and management letter Final reports Board meeting

10. Tips for a Successful Audit PREPARE

11. Tips for a Successful Audit Prep list Understand what is requested Have it ready before the auditors arrive Be realistic in how long it will take you to prepare Keep information up-to-date throughout the year

12. Tips for a Successful Audit Understand the auditors’ needs (space, internet connections, etc) Be available Have your staff meet with the audit staff before you start

13. Tips for a Successful Audit You need to be available, but they should combine their questions so you don’t get interrupted every five minutes. Communicate other commitments (mandatory meetings, etc) to the auditors so they can plan accordingly Review drafted reports carefully

14. Management Comment Letter Purpose Content Material weakness, significant deficiency, other Current and prior year comments Audit committee matters Types of Issues Addressed Internal controls Best practices (policies, tax issues, expense reports)

15. Audit Committee Structure Committee of the board Independence Include an expert Function Oversee financial reporting Oversee risk management and regulatory compliance Select auditor Review audit and auditor

16. After the Audit is Complete Post the audit entries Determine a process to address comments in the management comment letter Present to the board Evaluate the auditors and the audit process

17. Contact Information Vonna Laue 714-961-9300 x. 229 vlaue@capincrouse.com

18. Questions from the Reading by Ron Downing For those who have gone through a capital campaign:  What was your target amount vs. the amount raised? How long was the campaign? Did you use a consultant?  What was the biggest lesson or word of advice? What is your opinion regarding knowing and tracking who your significant donors are …  How did you use this in a capital campaign? Did you hold one-on- one meetings with them? Did you invite key/super donors to special events? On page 171 they said, In most campaigns, if at least 50% of the campaign goal is not reached with advance commitments, the campaign will not reach its goals. Comments? Agree? Experience?