Aud - Audit Oversight

Irgu

Le téléchargement nécessite un accès à la bibliothèque YouScribe
Tout savoir sur nos offres

2 pages

English

Le téléchargement nécessite un accès à la bibliothèque YouScribe
Tout savoir sur nos offres

A propos
Informations
Extrait

Description

✓✓✓letter is a compelling reason formost ministries to use the com-mittee approach. Elevated to theThe Audit board level, this review couldeasily consume too much time onOversight Process the board’s agenda.However, it may be mosteffective for many organizationswith relatively modest budgets—perhaps $500,000 or less—tohealthy environment for Reviewing the propriety ofcarry out the financial oversightfinancial accounting is con- fund-raising methods.responsibilities at the boardAducive to conducting theReviewing the extent of level. Ministries of this size tendLord’s work with excellence.unrelated business income to have smaller boards (often Adequate financial oversight goesactivities.right to heart of a responsible non-In some larger ECFA mem-profit board’s sound governance.bers, the responsibilities mightFinancial oversight responsi-• also include reviewing thebilities. When an audit review Financial Oversightresults of, and plans for, inter-committee is used, its responsibil-nal audit activity and review-ities may include the following: Positive Indicatorsing the proposed scope of theThe board approves the annual Reviewing the independent •annual audit with the inde-budget prior to the beginning ofauditors’ report on the financial pendent auditors. Nonprofitthe fiscal year.statements at the conclusion of boards execute these respon-the audit. sibilities in a variety of ways.•(unless a multi-year engage- One committee may ...

Informations

Publié par	Irgu
Nombre de lectures	21
Langue	English

Extrait

letter is a compelling reason for most ministries to use the com-The Audit mittee approach.Elevated to the board level, this review could easily consume too much time on Oversight Processthe board’s agenda. However, it may be most effective for many organizations with relatively modest budgets— perhaps $500,000 or less—to healthy environment forReviewing the propriety of ✓ carry out the financial oversight financial accounting is con-fund-raising methods. responsibilities at the board A✓of this size tendlevel. MinistriesReviewing the extent of ducive to conducting the Lord’s work with excellence. unrelated business incometo have smaller boards (often Adequate financial oversight goes activities. right to heart of a responsible non- In some larger ECFA mem-profit board’s sound governance. ✓ bers, the responsibilities might Financial oversightresponsi-• also include reviewing the Financial Oversight bilities.When an audit review results of, and plans for, inter-committee is used, its responsibil-nal audit activity and review-ities may include the following: Positive Indicators ing the proposed scope of the Reviewing the independent•The board approves the annual annual audit with the inde-auditors’ report on the financialbudget prior to the beginning of pendent auditors. Nonprofit statements at the conclusion ofthe fiscal year. boards execute these respon-the audit. sibilities in a variety of ways.•The board approves the annual (unless a multi-year engage-Reviewing the independent One committee may be ment letter is used) selection or auditors’ “management letter” assigned the responsibility of retention of the independent and management’s response to handling both the audit and auditors. that letter. finance functions. The board reviews the annual • Reviewing financial and Afinancecommittee may audit and management letter budget information provided by handle a portion of the respon-and is assured that a proper management. sibilities, such asthe review of response has been prepared to financial and budget informa-Reviewing the adequacy of the management letter. tion provided by management, accounting policies and the with anaudit review commit internal control structure. Caution Signs teecharged with the other • Neither the board nor the audit Reviewing relationships responsibilities. review committee meets with a between managementand the Theboardmay carry out allrepresentative of the audit firm. independent auditors. of these responsibilities. • The audit firm has a pattern of Recommending the selection never (or rarely) submitting or retention of the independent Financial oversight per-•management letters. auditors to the full board. formed by the board versus a •Management selects and retains Reviewing compliance withboard committee.Most ECFA the auditors. payroll and other tax filingmembers will undoubtedly dele-he CEO serves as the chairman requirements, including the IRSgate the financial oversight•T of the audit review committee. information returns (Form 990).responsibility to a board commit-tee. Thetime required to ade-Management places restrictions • O t h e rr e s p o n s i b i l i t i e s quately review the results of the on the auditors. assigned by the board might annual audit and management  include:

5-9 members) and to rely less on board committees, if at all.

• Compositionof an audit review committee.While the size of the audit committee should be determined by the organiza-tion’s needs, three to five mem-bers is usually a workable size. Committee members should possess broad business or non-profit experience, knowledge of the nonprofit’s activities, and accounting and finance expertise. The committee chairman should not be an employee of the organization. Theindependent auditor cannot be a member of the committee.A majority of the committee should not be related by blood or marriage or be employed by the organization. Committee members are gen-erally nonemployee members of the board.However, the use of nonboard members can be an acceptable approach.Nonboard members often bring accounting and finance expertise that is not present on the board.

Basic audit review commit-• tee functions.The committee will generally meet at least two times each year if the finance and audit review functions are com-bined into one committee.If a committee has only audit review responsibilities, one meeting per year may suffice. If at all possible, the commit-tee should meet personally with one or more representatives of the audit firm.If the audit review committee members are located remotely from the ministry and/or the auditor, a telephone conference call may be the best option. Theaudit firm represen-tative should either meet person-ally with the audit review committee or with the board to ensure adequate interchange.

Staff, such as the chief finan-cial officer, should generally be invited to audit review commit-tee meetings to answer questions and to provide information. When the audit review commit-tee or the board meets with the auditors, all staff should be excused from the discussion for at least part of the time.This pro-vides an opportunity for the inde-pendent accountant to give an objective evaluation of the per-formance of the financial staff and to determine that no restric-tions were placed by manage-ment on the scope of the audit.

Summary.One of the key areas of importance for a non-profit entity’s board is the review and approval of the orga-nization’s financial report.The board, either acting in the capac-ity of the full board or by dele-gating responsibility to a committee, must take care not to encroach on the duties and prerogatives of management. However, the board must thor-oughly appraise the adequacy of the audit effort, the accounting policies adopted by manage-ment, the adequacy of disclosure of information essential to a fair presentation of the financial affairs of the organization, and the quality of the ministry’s sys-tem of management and internal accounting controls.

Reprinted from FOCUS on Accountability

Univers
Ebooks
Livres audio
Presse
Podcasts
BD
Documents

Aud - Audit Oversight

YouScribe

Le catalogue

Le service

Les conditions