Selecting a Nonprofit Auditor

Is your nonprofit looking for an auditor? Selecting an auditor requires careful consideration to ensure your organization's financial integrity and credibility. Not all auditors are the same, and selecting the cheapest firm isn’t always the best choice. If your auditor lacks significant experience with nonprofits, they are more likely to miss mistakes that could cost your organization more in the long run.  

Management should consider the following to find the auditor that best fits your organization’s needs.  

  • Define your organization’s needs. Is your organization a single entity, or are there related entities that must also be included in the audit? Did your organization have $750,000 or more in federal expenditures for which a Single Audit is required? Are there other compliance or regulatory requirements?
  • Research potential auditors.  Based on your organization’s needs, look for auditors with the necessary experience to audit your organization.  First, make sure that they have experience in auditing nonprofit organizations.  Consider asking other nonprofits or your board of directors for recommendations.  Additionally, you can search online for nonprofit auditors, as most firms have websites that describe their services and expertise.  If your organization needs a Single Audit, make sure the audit firm can provide this service as not all CPA firms have the required continuing education to do so.  You can also look up a firm’s peer review if registered with the AICPA Peer Review Program.  The peer review helps monitor a firm’s accounting and auditing practices.  Firms enrolled in the AICPA Peer Review Program must have a peer review done once every three years to ensure their practices meet the required standards.  
  • Consider experience and reputation.  Evaluate the experience and reputation of potential auditors. Consider factors such as the firm's business years, its record in auditing nonprofits, and any relevant client testimonials or case studies.
  • Evaluate industry knowledge.  Nonprofit organizations have unique accounting and reporting requirements. Ensure your chosen auditor deeply understands nonprofit accounting standards, regulations, and best practices. Ask about their experience working with nonprofits similar to yours.
  • Assess compatibility and communication.  Building a strong working relationship with your auditor is essential. Evaluate how well potential auditors communicate and whether they are responsive to your questions and concerns. Consider scheduling interviews or meetings with prospective auditors to assess compatibility.  Be sure to ask about access to the auditors throughout the year, not just during the audit.  You want a financial partner to work with your organization year-round.  
  • Request proposals.  Once you've narrowed down your list of potential auditors, request proposals from each firm. The proposal should outline the scope of work, timeline, fees, and any additional services offered. Compare proposals to determine which auditor offers the best value for your organization.
  • Check references.  Before making a final decision, ask for references from past or current clients. Contact these organizations to inquire about their experiences working with the auditor, including the quality of their work, level of communication, and overall satisfaction.
  • Consider cost.  While cost should not be the sole determining factor, it's essential to consider your budget when selecting an auditor. Compare fees from different auditors and ensure that the services align with your organization's needs and resources.  When considering cost, remember some firms may have higher fees but may also provide a higher quality of work.   

Make the best decision for your organization.  Based on your research, interviews, and proposals, select the auditor that best meets your organization's requirements. Once you've decided, communicate your choice to the auditor and begin discussing the engagement details, including the audit timeline and any additional considerations.

Contributed by: Carrie Minnich, MAcct, CPA | Partner | DWD CPAs & Advisors

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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.