Nonprofit Audit RFPs
Posted on Wednesday, April 06, 2016
Whether it’s time for your organization’s first audit or you have decided to find a new audit firm, in order to obtain a CPA firm’s services for your audit work, your organization will most likely use a request for proposal (RFP) process. It is the audit committee’s responsibility to select a CPA firm that has the expertise and knowledge to perform an audit for your nonprofit organization. If your organization does not have an audit committee, the finance committee should take on this role.
When using an RFP process, make sure the objectives and scope of the services requested are clear. What services are you requesting? When are you expecting the services to be performed? When do the services need to be completed? Also make sure that items requested in the RFP are applicable to your organization. Numerous RFP templates are available; however, items are often included in these templates that may not apply to your nonprofit organization. For example, nonprofit organizations are not subject to the majority of Sarbanes Oxley requirements and only those nonprofits with federal expenditures of $750,000 or more are subject to a Single Audit.
Below is a list of some items that you should include in an RFP to make sure that you select an audit firm with the skills and experience to provide the services that your organization needs. To assist the audit firms in providing the best possible response to your RFP, it is a good idea to provide a copy of your organization’s most recent audited and internal financial statements and 990 with your request.
- Description of the firm (size, industries served, etc.).
- Name and biography of staff assigned to the audit.
- Experience in auditing nonprofit organizations.
- Description of why the firm believes it can add unique value/why is it different from other firms.
- Description of how the firm educates and informs clients on emerging issues relevant to the nonprofit sector.
- Experience with OMB’s Uniform Guidance (IF your organization requires a Single Audit).
- Statement of the firm’s understanding of work to be performed, including tax and nonaudit services.
- A proposed timeline for fieldwork and reporting, including any required meetings with the board or audit/finance committee.
- Fee for the services to be provided.
- Any extra costs that may arise.
- References from other comparable nonprofit audit clients.
- Firm’s most recent peer review report.
When reviewing the RFPs received, the audit committee should evaluate the responses to determine if the firm understands nonprofit accounting and the specific requirements unique to the nonprofit sector, not just the cost. The cost of an audit can be a significant expense to a nonprofit; however, the organization should think of an audit as an investment rather than an expense. Organizations can get much more from audit than a set of audited financial statements. For example, management letters issued at the end of an audit provide useful recommendations for management. In addition, auditors that work primarily with nonprofit organizations have an in-depth knowledge of the sector and can provide valuable advice on many operational aspects of nonprofits.
Posted by: Carrie Minnich, CPA
Posted in Mission Minded Nonprofits
Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.