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so the benefits of a non-profit audit Yes you heard that correctly we're going to be talking about why you actually may want to consider getting audited and I know your ears are probably perking up like what is she talking about so let's get started keep watching you're going to want to tune in so I know that but it's a lot of times are compared to you know pulling my hair out a lot of times people call them stressful overwhelming they hate them and I get it but as a former auditor and someone who is now also on the side of working with non-profits to get them through their audit I'm realizing that organizations that have a tough time getting through the audit process it's usually because it's due to a lack of preparation right A lot of times you're either you know unprepared it's either come at a really inopportune time or honestly things have just been a mess and so when you throw the audit into the process it's like okay what are we doing here too many things happening at once and I get it that's also why we actually manage the audit process for our clients so it's one thing that they don't have on their plate but with that there still has to be a process around it there still has to be a clear way that we walk you through that or even with us managing it it'll still feel crazy right and so what we want to talk about today though is the benefits of being audited and how it probably can be a little bit less crazy and overwhelming for you first I want to start off by saying that usually you can't evade an audit at some point you will be audited unless you intentionally stay small or unless you intentionally avoid applying for grants that require you to submit an audit report right so if you manage Federal funding there's going to be a time where you have to be audited once you hit that 750k in federal funds now if you aren't managing federal funds there are still State thresholds so depending on what state you're operating in you need to be aware of what the requirements are for that state so you know when you are required to be audited now that that's something that you can't avoid right so that's that now the other part of that is there are some organizations who are not yet required to be audited but actually choose to be audited and that's kind of where we're taking this video today right you might be thinking like why would you even choose to be audited but to be honest there really are some benefits besides the fact that there are some grantors that do require you to submit an order report there are some other reasons why you may want to consider voluntarily being audited and let's get into reason number one so the first reason that you want to think about being audited is for the independent stamp of approval from a CPA an external CPA at that so whenever you have to be audited typically nonprofits will have a process for where they put out an RFP they'll get some proposals from a few different CPAs but all in all an external CPA has to complete your audit they will take your organization through a series of tests known as field work those 10 test will help them to come up with what's called an opinion on how well run your organization is like how sound your financial management is and I'm being very specific in the words that I'm using because I don't want to use like accounting jargon and so essentially they're going to take you through these tests you're going to get a report and it's going to say yes or no as far as how well run your organization is from the from a financial uh standpoint now there are some times where you still get a satisfactory report but there's something called exceptions it's usually included in the notes of the report where it may say like yes for the most part this organization does really well with do it in their funds however these are some of the gaps that we found and so these are some of the things that you want to fix I'll talk a little bit more about that later on in the video but this is the premise of getting that report when you get audited by an external CPA that lets external users of your financial statements like grantors funders the bank no the that okay someone else outside of this organization has looked at this someone who is Credible right because we know that um CPAs go through a series of studying they have to take an exam in order to become certified and so they have a certain air about them I guess I'll say um as it relates to the profession and so you know if this CPA or this CPA firm has audited your organization the an external party can trust what they say right they can trust that stamp of approval that says yes this organization gets funds they do XYZ with those funds we were able to support it with X documentation all good here right or not right because we do have some organizations that end up getting you know you you have some that end up getting negative um reports which really means that there's a lot of work that they have to do to fine-tune things into what their organization into shape so when a CPA is going through your financials through your process determining that you actually have procedures in place some of the things that they're looking for is like are there controls in place are you actually following through on those controls do you have supporting documentations for the different transactions that have happened right throughout their throughout that year is there an opportunity for fraud to take place because we know oftentimes that nonprofits end up in the news right due to scandals talking about misappropriation of assets or this person stole this money the accountant had too much control and so these are some of the things that the external CPA is going to be looking at and then they make an opinion right after looking at a series of these things they leave they make an opinion about how they believe your organization is run through that Financial lens and so if you get a great audit report you know that's a plus for anybody who is considering to give your organization funds and typically once you've been audited whether it's through requirement or by choice you can then upload that report either through candid which is um a non-profit website tool where people tend to go to look into organizations or some people even upload it to their website to the organization's website because you know when someone is thinking about funding you or someone is thinking about donating to your organization they may want to just browse your website and so you may want to make your audit report available there because they can easily click download and read and see what your organization is about what you've done with your funds in the past and what this CPA's opinion is on how well run your organization is through that Financial lens now the second reason why you may want to choose to get audited is because it is appealing to donors right you have some donors and funders who do require you to get audited but there are some that don't when they see that you have been audited it is appealing it says to them okay they've been given this stamp of approval so I can trust to some extent that they are doing what they said they're doing when they get money the reason why so many donors are hesitant is just because there is a lot of negative news out there and so being audited really does say something about an organization and to be honest when you choose to get audited it's like saying yes come into my house it's not because you showed up banging and I have to let you in but I am willingly opening the door and telling you to come in and open the closet doors look under the covers look under the bed see what we have here we have nothing to hide and so that is very appealing to donors because it says to them okay this organization doesn't even have to be audited and they're inviting us in okay maybe this is an organization who has a cause that is worth supporting now the third reason why you may want to consider being audited is to provide Financial transparency now transparency honestly should be a core value of every non-profit out there because so much of what you do is on Front Street right we know that nonprofits don't have an owner we know that the public right has the right because they are the donors they're the ones giving to see what it is that you're doing with your funds right where are you spending these things and so by being audited you are saying hey we are transparent with what's happening here right so if you want to know what happened when we had that fundraiser in June here it is being transparent really helps you to build relationships it also shows your commitment to operating with integrity and lastly it truly shows donors that you are willing to put everything that is happening behind closed doors on Front Street for them to see for them to read for them to gain an understanding of because that also tells them like the culture the flavor of the organization right when they look at these numbers there should be a story to them and by having the audit done it really increases the confidence right that external users have in your financials and that's why the reason number one about having that external stamp of approval from a CPA is so key because they know that this person is independent of your organization there is no conflict of interest and so they are using their professional expertise to give an opinion on those financials now those are the three things that I really wanted to discuss but there's a bonus that I have for you that that you may not like to hear but the other thing is that being audited highlights the gaps right in your financial process so you know sometimes you don't walk away with this a plus audit maybe you walk away with a B because there are some things that you could be doing better the reason why I am a proponent of this is because a lot of times you can't see it from the inside right but someone on the outside right that external CPA who comes in and takes a look there are some things that one they know is important to funders one that they know is in line right with Federal Regulations right and things that keep you compliant so if they say hey these are three areas where maybe it wasn't on fire or it's not a 9-1-1 but these are three areas that you want to consider looking at and fixing that tells you right there these are three areas that we need to be looking at and fixing when we go through the audit process with clients one of the things that we are really big on is once the audit report is issued we don't just close things up move on and business as usual and that's where a lot of organizations get tripped up they just can't wait to get the audit report out and then once the audit report out it's like sigh of relief but then nothing happens your CPA is your friend and so when they are indicating that there are things that you can do to be better or improve those are things that you want to take heed to especially if the audit report wasn't favorable but even if it was if they took the time to indicate that this is something that you want to consider then it's something that you need to be looking into and so as part of our wrap-up process we go through those things and then we make a plan for how we're going to address those things so when you then get added it that next year these are not things that continue to come up one thing that I really can't stand as it relates to these non-profit audits or organizations that don't listen to the gaps or areas of improvement and then you end up seeing these same things on report after report after report what do you think that that says to someone who's external from your organization like a bank if you're going after a loan or a line of credit right what do you think that says right it's like you're not paying attention or you don't care enough to fix and we know that that's not the truth right and so so that is something too that you want to consider right and why getting audited could be of benefit to your organization now I do not want to continue to perpetuate this idea that audits are horrible they're gruesome I get it sometimes they really can be hard but the better you get at preparing the easier it is to go through the audit one of the things that we're really big on at Visionary is audit prep so that when the but it does roll around it isn't a mad house or a Mad Dash to pull everything together to then be audited right and so you want to think about whether or not you're prepared and if you are an organization that is not required to be audited but you're thinking about it then you want to think about what does Preparation look like because it does make the audit process easier now I hope this gave you a different perspective on why you may want to consider being audited right so now when you have your next management meeting or you have your next board meeting you're actually armed with some reasons why it may be a benefit to your organization and you're ready to at least just have the discussion right and so I hope that this was helpful if you have any comments please leave them I'd love to you know continue this discussion in the comments and if not I'll see you in the next video foreign