For any organisation the end of year audit is an important function and it could be argued, more so for a not for profit organisation.

The main reason for this is that the audit provides an independent review of the financial operations of the organisation.  As a volunteer treasurer as well as a committee of management member it also serves another critical purpose.

Whereas a commercial organisation is primarily profit driven and has a focus on the returns to shareholders, a not for profit organisation is more focussed on how effective were the use of funds.

As a majority of the funds for a not for profit organisation will come from the public in the form of donations, membership or subscription fees, grants from the government or philanthropic organisations, another element of the audit is public accountability.

This relates not only to proving the funds were used as intended but that they were used efficiently and effectively.

An audit can also serve another purpose especially with some smaller not for profit organisations where it is not always practical to employ specialist financial management staff.

Often in these situations the volunteer treasurer provides the financial expertise but due to the voluntary nature of the role it can be difficult to find time to review some financial aspects of the organisation.  With a proper audit plan which may also include an interim audit, the treasurer can request that the auditors have a more detailed examination of key elements.

For any new treasurer, an audit can also assist with identifying any issues or concerns that may need to be addressed.

For example, this could relate to internal controls, asset management, debtor management or even management of petty cash.  This is why it is important to meet with your auditors, especially when first appointed as a treasurer, to discuss any issues as well as whether anything changes need to be implemented.

The next post will look at what an audit actually achieves and show you that having an audit completed with no issues or concerns identified does not mean everything is in order with the organisation.