Question

Discuss the ways a not-for-profit organization should prepare for an external audit.

·        Discuss which charitable not-for-profit organizations are required to have an independent audit and which authority requires the audit.

Answer 1

Non profit orgaization should prepare their independent audit according to the laws requiremet. They should follow state and federal laws requirements. It depends on various types of type of non profit organization. if the non profit organization is a private foundaton then it will require non profit gurantee. if any non profit organization profit incrases more then 750000 then the state government contracts require audit. charitable organization requires audited financial statments to be presented. Non profit organization should prepare pre audit metting by this organization decide who will assist the audit team.In this meeting It is decided that what documents will be require to auditor. after pre audit meeting documents ar assembled. all the documents which will require by the auditors all the ledger and bank reconcilation statements tax reports. after that audiors visit should be preppared which places will audior visit. and all the necessary requirements needed by the auditor. All the things should be organized while conducting the external audit. This willl ensure smoth functioning of external audit. All th preparation should be communicated in all the stages. All the plans should look forward before conducting the external audit. Auditing responsibilties should be stated at one place. After conducting the external audit all the audit extracts should be discussed with the board.

organization which has revenue more than 200000 gross profit must review the financial statements by certified public accountants. The review of financial statments depend on gross recepit revenue amount. Charitable organization require audit if they expand more federal funds in a year of 750000.