Audits. Audit requirements vary by the size of the organization, funding source, contract compliance issues, etc. Generally it is best practice to have an audit done when revenues exceed $100,000 annually, or if there is a complex funding system at lower amounts. Many United Way organizations required their partner agencies to have an annual audit, although it is not always required to be a certified audit. Organizations that receive public monies usually have additional requirements, such as A-133 audits, etc. 

The finance committee of the board, or a separate audit committee (not yet required) should have the responsibility of setting up audit guidelines, interviewing and selecting an audit firm, and reviewing the audit when completed, including the management letter if applicable. Board members on the audit committee should be free from conflicts of interest and should not receive any compensation for their service on the committee. There should be at least one “financial expert” on the audit committee. Financial literacy training should be provided to all board members to ensure they are able to read and understand the financial information presented to them. 

Best practices for the audit firm include rotating the auditor or lead partner at least every five years; avoiding any conflict of interest in staff exchange between audit firm and organization; not using the audit firm for non-auditing services (except tax form preparation with pre-approval from audit committee); requiring disclosure to audit committee of critical accounting policies and practices; and using the audit committee to oversee and enforce the conflict of interest policy.