A homeschool leader in North Carolina recently wrote to me looking for help with doing an audit:
We offer boys and girls soccer, basketball, baseball, softball, volleyball, and cheerleading. In January we received our 501c3 status as a non-profit group. It is time for our annual audit, but I am not sure which way to go now and who to get to do the audit.
This group had bylaws that required their financial statements to be audited by qualified individuals.
For small nonprofits (revenues less than $25,000 per year), audits are rarely needed and are frequently too expensive and time consuming. Most nonprofit audits cost at least $3,000. Instead of an audit, I recommended changes to their bylaws and some practices and policies to help them be fiscally responsible, but not over burdened.
Some of my suggestions were:
- Separation of duties
- Monthly bank reconciliation
- Regular financial reporting to the board
- Create and monitor a budget
These practices do not replace the role of an full audit, but they help provide accountability.
Finally, I recommended they consider performing an internal audit occasionally. An internal audit can be preformed by volunteers from your organization. Here are a few websites that offer more information.
The following website explains internal audits for small churches and nonprofits:
https://www.freechurchaccounting.com/churchaudit.html
It also contains a checklist for conducting an internal audit
https://www.freechurchaccounting.com/support-files/internalauditchecklistguidelines.pdf
Does your group have good financial policies and practices? You can start with my article, Best Financial Practices for Homeschool Groups. It is available when you sign up for my newsletter here.
Also my ebook Money Management for Homeschool Organizations has advice and tips for properly handling the finances in your homeschool group. Ebook price $10
Read more here.
Here’s to keeping your homeschool group strong!
Carol Topp, CPA