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Guidelines for auditing non-profit groups
Guidelines for Auditing Non-profit Financial Records
The main concern with non-profit groups is the handling of monies and more specifically cash transactions. We are all familiar with news stories in recent years where funds have gone missing.
The issue is larger in groups with very active fundraising and handling of large amounts of cash.
Groups should address this issue on a monthly basis and not only annually when statements are required. This is often too late to correct the problem should one arise.
Boards and executive must be concerned over procedures to properly handle funds and ensure that checks and balances are in place to not allow misappropriation of funds. It is the board’s responsibility to ensure funds are properly managed.
Recommended procedures include:
- having two signatories on all cheques
- not pre-signing cheques
- ensuring that the treasurer reports at monthly meetings
- ensuring someone else on the board reviews the treasurers work on a monthly basis
- having someone available to assist the treasurer should they become busy with family or business matters
- regularly changing the treasurer position every two years
- ensuring the treasurer is independent and not involved in handling cash at events, and rather reviews the information from event volunteers and ensures funds are deposited
- having someone in the organization do a volunteer audit annually inspecting things such as
o whether all cheques are properly signed
o whether bank reconciliations and statements balance to the reconciliations
o ensuring all loans, receivables, payables and capital assets appear properly recorded
o whether statements are consistent from year to year….ie. the ending bank balance last year was the starting balance this year.
- having this person print a report of the procedures done and present it at the annual meeting
Should an outside audit be required, it should be noted that they are not for the purpose of uncovering fraud. The cost of an audit may be prohibitive and may range from $1000 to $3500 depending on the size of the organization.
Prepared by Chad Sheppard Chartered Accountant
with offices in Stonewall and Selkirk