SayPro Internal Audit Review: Perform a Preliminary Internal Audit of the Records and Identify Any Discrepancies or Issues That Need to Be Resolved.

Objective: To conduct a thorough internal audit review of SayPro’s financial records related to fundraising activities, donations, sponsorships, crowdfunding contributions, and fund allocations. The goal is to identify any discrepancies, issues, or areas of non-compliance that need to be addressed before the formal audit. This preliminary internal audit ensures that the organization is fully prepared, transparent, and compliant when it undergoes the external audit process.

1. What is an Internal Audit Review?

An internal audit review is a self-assessment process in which an organization reviews its own financial records, systems, and operations to ensure they comply with policies, regulations, and best practices. For SayPro, this audit focuses on ensuring that all records related to donations, sponsorships, crowdfunding campaigns, and fund allocations are accurate, complete, and transparent. The goal of this review is to identify discrepancies, errors, or non-compliant practices early, giving SayPro the opportunity to address these issues before the external audit.

2. Key Steps for Conducting the Internal Audit Review

A. Review Financial Records for Accuracy and Completeness

• Reconcile Donations and Sponsorships:
  • Review donation logs, sponsorship agreements, and bank records to ensure that all donations and sponsor payments have been recorded correctly.
  • Ensure that the amounts listed in the donation logs and sponsorship records match the bank deposits and other financial documentation.
  • Verify that no donations or sponsorships have been overlooked or omitted in the financial records.
• Verify Fund Allocations and Expenditures:
  • Review the fund allocation reports to ensure that funds raised through donations, sponsorships, and crowdfunding have been properly allocated to their intended purposes.
  • Check that all expenditures are supported by appropriate documentation such as receipts, invoices, or expense reports.
  • Ensure that the allocation of funds aligns with the stated goals of the fundraising campaign or program.

Action Steps:

• Cross-reference donation and sponsorship records with bank statements.
• Ensure that all funds are allocated in accordance with their intended purpose.
• Verify that all expenses related to fundraising activities are properly documented and classified.

B. Assess Compliance with Tax Regulations and Reporting Requirements

• Review IRS Form 990 Filings:
  • Verify that the most recent Form 990 is filed accurately and on time, disclosing all relevant information related to fundraising income and expenses.
  • Ensure that the report includes detailed and accurate descriptions of revenue from donations, sponsorships, crowdfunding, and any other fundraising activities.
  • Check for any inconsistencies or missing information that could raise red flags during the external audit.
• Tax-Exempt Status Verification:
  • Review documentation related to SayPro’s 501(c)(3) status to ensure that it is active and that the organization remains in compliance with federal tax-exempt status requirements.
  • Confirm that all donation receipts are issued in compliance with IRS requirements for tax-deductible donations.

Action Steps:

• Review Form 990 for accuracy and completeness.
• Confirm that donation receipts are properly issued and meet IRS tax requirements.
• Ensure tax-exempt status is up-to-date and complies with IRS regulations.

C. Examine Sponsorship and Crowdfunding Agreements

• Sponsorship Contracts Review:
  • Assess all sponsorship agreements to ensure they are clearly documented and compliant with relevant tax-exempt regulations.
  • Ensure that sponsor payments match the amounts specified in the contracts and that any benefits provided to sponsors are accurately recorded.
  • Verify that no excess benefits (e.g., overvalued perks) have been provided to sponsors, which could jeopardize SayPro’s tax-exempt status.
• Crowdfunding Platform Review:
  • Review all crowdfunding platform agreements and ensure that SayPro is adhering to the platform’s terms and conditions, especially with respect to fund allocation, reporting, and donor acknowledgment.
  • Verify that funds raised through crowdfunding platforms are properly accounted for and correctly transferred to SayPro’s accounts.

Action Steps:

• Review all sponsorship contracts for compliance with legal and tax-exempt guidelines.
• Ensure that crowdfunding platform agreements are followed, and that funds are properly accounted for.

D. Inspect Fund Allocation and Expenditure Documentation

• Verify Fund Usage:
  • Confirm that all funds raised are used for their intended purposes as outlined in the fundraising campaigns. For instance, if funds were raised for a specific program or project, ensure that they are allocated correctly, and review expense reports for supporting documentation.
  • Verify that any non-programmatic expenses (such as event-related costs) are justified and properly categorized as fundraising expenses.
• Cross-Check Program Spending:
  • Review expenses related to fundraising campaigns, ensuring that costs such as venue rentals, promotional materials, and event-related expenses are properly documented and accounted for.
  • Check for any unapproved or unauthorized expenditures that could cause discrepancies in the fund allocation reports.

Action Steps:

• Review program-related expenses to ensure funds are used according to their intended purpose.
• Cross-reference fund allocation reports with expense receipts and invoices for accuracy.

E. Identify Discrepancies and Investigate Irregularities

• Spot Unmatched Transactions:
  • During the internal audit, look for discrepancies such as unmatched transactions or unexplained differences between donation logs and bank deposits.
  • Investigate any discrepancies to determine whether they are due to clerical errors, missed donations, or fraudulent activities.
• Assess Internal Controls and Procedures:
  • Evaluate SayPro’s internal controls to ensure that proper checks and balances are in place to prevent errors or misappropriations of funds.
  • Assess whether there are any weaknesses in record-keeping, documentation processes, or approval procedures that could lead to discrepancies or issues.

Action Steps:

• Investigate any discrepancies or irregularities in the records.
• Review internal controls and procedures for potential improvements.

F. Document Findings and Action Plan

• Internal Audit Report:
  • Compile all findings from the internal audit into a detailed internal audit report, highlighting any discrepancies, issues, or areas of non-compliance that need to be addressed before the external audit.
  • Include recommendations for correcting discrepancies and implementing changes to improve financial record-keeping and compliance procedures.
• Corrective Action Plan:
  • Develop a corrective action plan to resolve any issues identified during the internal audit review. This may include correcting financial records, addressing internal control weaknesses, or improving documentation procedures.
  • Set clear timelines for implementing corrective actions and assign responsibilities to relevant staff members.

Action Steps:

• Create a comprehensive internal audit report outlining discrepancies and recommended actions.
• Develop a corrective action plan with specific timelines and responsibilities.

3. Steps for the Internal Audit Review Process

To ensure that the internal audit review is thorough and effective, follow these steps:

Step 1: Collect All Relevant Documents

• Gather all financial records, including donation logs, sponsorship agreements, crowdfunding platform reports, fund allocation reports, and bank statements.
• Ensure that the necessary documentation, such as IRS forms, receipts, and expense reports, is readily available for review.

Step 2: Reconcile Financial Data

• Cross-reference donation records with bank deposits to verify that all donations and sponsorship payments are recorded correctly.
• Review the allocation of funds to ensure they are used according to the specified purpose of the campaign or fundraising event.

Step 3: Identify and Investigate Discrepancies

• Look for any discrepancies or irregularities in the financial records. Investigate the cause of these discrepancies and ensure they are addressed before the external audit.

Step 4: Review Compliance and Tax Documentation

• Verify compliance with tax laws and ensure that all necessary forms (e.g., Form 990) are filed correctly. Check that donor receipts and sponsorship agreements comply with IRS regulations.

Step 5: Document Findings and Plan for Resolution

• Compile all findings in an internal audit report, outlining any discrepancies and offering recommendations for corrective action.
• Create a plan to address any issues identified, assigning clear responsibilities for resolving each issue.

4. Conclusion

Performing a comprehensive internal audit review is a crucial step in the preparation process for SayPro’s external audit. By thoroughly examining financial records, identifying discrepancies, and ensuring compliance with tax laws and regulations, SayPro can ensure that its fundraising activities are transparent, accurate, and fully prepared for the formal audit. Addressing issues early on through internal audits helps prevent costly mistakes, improves overall financial management, and enhances the organization’s accountability and trust with donors, sponsors, and other stakeholders.