audit best practices for community development corporations may 2011
TRANSCRIPT
AUDIT BEST PRACTICES
FOR COMMUNITY
DEVELOPMENT
CORPORATIONS
May 2011
Correcting that “Audit” Mindset
Auditing Standards-What’s New?
• SAS 99 through 121• MORE clarity of
roles, purpose of audit, risk assessment, fraud considerations, evidence, planning & supervision (independence), risk & materiality, sampling
• Auditor’s responsibilities
Is Your CDC Ready? Prepared?
• How much are YOU doing for auditor?
• Are you “ready” for auditor?
• How much was auditor usually doing FOR you?– Adjustments?– Depreciation?– Accruals?
Accounting Standards-What’s New?
• Not so much…– Mainly “familiar”
rules, potentially new issues facing you, like..
• Lower of cost or market (e.g. writing down your real estate holdings)
• Debt ratio concerns for readers
• Consolidations
Here’s What We’re Seeing…
• Classified statements– Current assets– Current liabilities– Support income– Earned income– Programmatic expense– Administrative expense– Fundraising expense
• Consolidated statements• Consolidating schedules• Value of real estate =
same for years?• Excess acronyms
• Clear info on restricted net assets
• Comparative statements• Functional expense details
– In meaningful way• Footnote references in
statements• Readable, meaningful
footnotes – of what’s needed
• Clean, clear schedules – especially with A-133
• If Management Letter – RESPOND!
• AND Pay attention to your 990!
EXPENSES ANALYSIS
• Recent national non-profit study found 25 – 45 year olds consider the Internet “grades” for NPO’s before giving
• The quality of management determines quality of decision making about incurring expenses….
AUDIT “COST”• What does you audit tell its
readers• Funds (income & debt) are
MUCH MORE SCARCE, readers better:– Understand the business– Understand the financial
results– See appropriate ratios– Have accurate, timely,
trusted financial statements• How can you save on audit
costs? Talk with your auditor!
• Do NOT make your funders “guess”
Need a follow up?
• Contact LISC – They are your partner, their business is your growth
• Contact Joanne @ [email protected]