Editors Note: DB&A is pleased to feature this article from partner and nonprofit thought leader Mike Hablewitz of Wegner CPAs
“We need an audit.” I hear these four little words quite often when I receive phone calls from various churches and other ministries looking for some financial guidance. Sometimes, after talking through their specific situation, we mutually come to the conclusion that they really do not need or want an audit. Instead, they would rather engage with us to provide some assistance in another capacity, such as improving their bookkeeping and financial reporting, or strengthening their internal controls. That’s great and we are happy to do that. However, there certainly are instances where it is determined that an audit is appropriate. When might that be the case?
I know, the word “audit” doesn’t exactly conjure up positive thoughts for most people. I get that, and that’s why I tell people we are “good auditors” – we want to help you improve, not slap your wrist for things that you did wrong. There really are many times when conducting an audit is fitting. Perhaps your organization has had significant turnover in the financial staff. Perhaps you have concerns about the financial staff’s abilities, or about the honesty of an employee involved with the finances. Maybe you’ve experience significant growth recently and need some guidance. Or maybe you are one of the many ministries that chooses to have an annual (or periodic) audit performed because you feel it is important to have that third party perspective, and it can give your members and donors a level of financial reassurance. These might all be situations to have an audit, but there is one specific time – which is often overlooked – where I feel that all ministries should strongly consider having an audit: when the organization is getting ready to launch a capital campaign.
I recently took a call from an administrator at a Christian church and school in the planning stages of embarking on a capital campaign, and we discussed why it was a well-timed call and why they should consider doing an audit.
What is it about a capital campaign that makes it such a good time to have an audit? There are several reasons, including:
- You want assurance that your current financial statements are accurate, so you know exactly where you stand financially and how much money you need to raise to complete the project.
- You will be receiving a lot more money than you typically do, and you want to make sure you have the systems in place to track and account for these funds correctly.
- You may have additional people involved in the campaign who normally are not involved in the finances, and you need to make sure there are controls in place over these people as well.
- If you are supplementing the campaign funds by obtaining a loan, the lending institution may require an audit be performed and a copy of the audit report be sent to them.
- Being able to show potential donors your audited financial statements demonstrates that you are serious about financial accountability and may give them more motivation to give to the campaign.
As with many things in life, it is good to be proactive. As such, I feel doing an audit at the front-end of the capital campaign is a wise decision. That said, doing an audit at the end of the campaign (or during!) to make sure all the funds are accounted for accurately is never a bad idea either! Who knows? Maybe you’ll even come to really enjoy working with us auditors. A guy can dream anyway.
About Wegner CPAs
At Wegner CPAs serving nonprofits is our passion. We currently serve over 700 tax-exempt organizations across the nation including many faith-based organizations. Our dedicated nonprofit team specializes in serving your unique management, accounting, and financial reporting needs. Our goal is to provide more than just an audit report. We listen, research, advise, and implement solutions to guide you beyond the numbers to achieve your mission. To learn more, visit us online or call Mike Hablewitz at (888) 204-7665.