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A non-profit organization is also under an obligation to conduct an audit of its financial statements on an annual basis. The donors have the right to know and check whether the funds are being utilized for the decided purpose or not. They provide additional aid by way of donations to the organizations. This might lead to the misuse of funds. Thus, to maintain transparency and fairness, an audit is required.
NPO, also known as a non-profit organization, is a specific kind of organization which aims at solving social causes and serving people at large. The source of revenue in such type of organization is by way of donations, charity programmes, fund-raising events or fees charged to people for becoming members of such organization.
Such organizations are involved in activities like education, the healthcare sector, scientific and professional service, entertainment, religious acts, and social assistance.
The main purpose audit of a non-profit organization is for verifying the accuracy and fairness of the financial data present in the financial statements. This analysis helps a Chartered Accountant to give an opinion based upon the observation made with proper implementation of a defined set of accounting and auditing compliances.
The audit process of an NPO is a bit different from the audit of other profit-making organizations due to the calculation of taxes. Thus, a manager of a non-profit organization needs to ensure each and every detail for the proper conduction of an audit of the organization. The manager can look into a checklist to ensure that everything is as per the set and prevailing rules and regulations.
The important checklist points for a smooth and effective audit of a non-profit organization are as follows:
The auditor and the person managing a non-profit organization must follow certain checklist points so that the audit process gets successful. Getting an audit of the financial statements of such an organization not only increases the quality of operations of the organization but also enhances reliability and confidentiality among the people making donations. Positive audit reports depict that the organization is working towards the set goal for the welfare of the public at large.
Also Read:Know All About NGO AuditWhat Are The Basic Principles Of Auditing?
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