SayPro: How to Work with External Auditors for Nonprofit Fundraising Audits.

SayPro: How to Work with External Auditors for Nonprofit Fundraising Audits

At SayPro, we understand that working with external auditors is an essential part of maintaining transparency, accountability, and compliance in our nonprofit operations, especially regarding fundraising activities. A successful collaboration with auditors helps ensure that our financial practices are sound and in accordance with regulations. Here’s how we approach working with external auditors for nonprofit fundraising audits to maintain best practices:

1. Prepare and Share Documentation Ahead of Time

• Organizing Financial Records: Prior to the audit, SayPro ensures that all financial records are organized, complete, and readily available for review. This includes donations, sponsorships, crowdfunding revenue, event expenses, and in-kind contributions. Our donor management system ensures that we have an accurate and accessible record of all transactions, making it easier for auditors to verify income and expenditures.
• Campaign and Fundraising Reports: We prepare detailed reports for each fundraising campaign, including how funds were raised, how much was spent, and how funds were allocated. These reports are comprehensive and include any budget-to-actual comparisons and variances.
• Supporting Documents: We compile all necessary supporting documentation, such as receipts, contracts, donor acknowledgment letters, bank statements, and sponsorship agreements. Ensuring this documentation is organized and accessible reduces audit time and helps auditors verify the accuracy of our records.

2. Define the Scope and Expectations

• Clarify the Audit Scope: At the start of the audit process, SayPro clearly defines the scope of the audit with the external auditors. This includes discussing the specific areas of fundraising and financial management they will be reviewing, such as donation tracking, fundraising event expenses, sponsorship funds, and overall financial reporting.
• Set Expectations: We align with the auditors on key expectations, such as timelines, deliverables, and any areas of focus (e.g., specific campaigns or tax-deductible donations). This ensures that everyone is on the same page regarding the audit process.

3. Provide Access to Key Personnel and Systems

• Granting Access: SayPro ensures that auditors have access to key personnel who can provide context for any transactions, clarify questions, and support the verification of financial data. This might include finance staff, development team members, and anyone involved in fundraising operations.
• Provide System Access: If needed, auditors are given access to our donor management system and accounting software, which contains records of all donations, payments, and other financial data. This transparency allows auditors to perform their tasks efficiently.

4. Be Transparent and Open with Auditors

• Clear Communication: We foster a transparent and open relationship with our external auditors, encouraging clear communication throughout the audit process. If there are any issues, discrepancies, or challenges, SayPro is proactive in providing explanations and resolving concerns.
• Addressing Questions Promptly: Auditors may ask follow-up questions or request additional information during their review. We ensure that responses are provided promptly and accurately to maintain a smooth audit process.

5. Ensure Compliance with Regulations

• Stay Compliant with Fundraising Regulations: SayPro works closely with auditors to ensure full compliance with fundraising regulations. This includes adherence to state and federal laws, IRS requirements, and nonprofit best practices. Auditors will review our Form 990, confirm proper handling of tax-deductible donations, and ensure that we are in compliance with all tax-exempt status regulations.
• Verify Reporting and Documentation Standards: We work with auditors to ensure that donor acknowledgments and receipts, particularly for donations over $250, are issued correctly and in accordance with IRS guidelines.

6. Collaborate on Identifying Risks and Improving Processes

• Internal Controls and Risk Assessment: External auditors assess SayPro’s internal controls, including the segregation of duties, transaction approvals, and other financial management practices. We work with auditors to identify any potential risks, such as fraud or mismanagement, and take steps to mitigate those risks.
• Audit Recommendations: After completing the audit, auditors provide recommendations for improvement. SayPro is committed to implementing these suggestions, whether it involves tightening internal controls, improving financial reporting, or enhancing donor management systems.

7. Review and Act on Audit Findings

• Audit Findings Review: SayPro takes audit findings seriously and reviews them thoroughly with external auditors. We go through each issue in detail to understand the root cause and determine whether corrective actions are needed.
• Corrective Action Plan: If any issues are identified during the audit, such as discrepancies in donation records or improper expense allocation, SayPro takes immediate action to resolve these problems. We create a corrective action plan and implement it to ensure compliance and prevent future issues.

8. Regular Check-Ins Throughout the Audit

• Ongoing Collaboration: During the audit, we stay in regular communication with auditors, checking in periodically to ensure that the process is on track. If there are any questions or requests for additional documentation, we address them quickly to avoid delays.
• Timely Responses: SayPro ensures that all documentation and requested clarifications are provided in a timely manner to avoid unnecessary delays in the audit process.

9. Post-Audit Reflection and Transparency

• Audit Report Review: Once the audit is complete, SayPro reviews the final audit report in detail. This report typically includes an opinion on the financial statements, an assessment of internal controls, and any recommendations for improvement.
• Public Disclosure: In line with our commitment to transparency, we share the audit findings with key stakeholders, including donors, sponsors, and board members. Our Form 990, which includes audited financial statements, is made publicly available on our website and through GuideStar to maintain transparency and trust.
• Implementing Improvements: After the audit, we evaluate the audit findings and incorporate necessary changes into our processes. This includes enhancing our financial systems, improving donor tracking, or revising our internal policies to reduce the risk of non-compliance in the future.

10. Building a Long-Term Relationship with Auditors

• Ongoing Relationship: We aim to build a long-term, positive relationship with external auditors. This relationship fosters a deeper understanding of our operations and enables auditors to provide more tailored advice and insights for future audits.
• Continuous Improvement: By working closely with auditors year after year, SayPro can continuously improve its financial processes and ensure that our fundraising operations are always in line with best practices and legal requirements.

Conclusion

Working with external auditors for nonprofit fundraising audits is a key aspect of maintaining financial integrity, transparency, and accountability. At SayPro, we approach audits with preparation, transparency, and a commitment to improvement. By collaborating effectively with auditors, addressing their recommendations, and taking proactive steps to enhance our financial practices, we ensure that our donors and stakeholders can trust that their contributions are being used appropriately to advance our mission.