Importance of Audited Financial Statements for a Nonprofit Organizations

Importance of Audited Financial Statements for a Nonprofit Organizations

Audited Nonprofit Financial Statements

Check out the importance of Audited Nonprofit Financial Statements:

 1- Peace of Mind to Donors.

Audited financial statements act as proof that all available funds are well utilized and provide the donors some peace of mind knowing that the funds donated are well used. As a matter of fact, nonprofit organizations that provide their audited financial statements get more donations than those who don’t.

 2- Securing New Grant Funds

Many of the nonprofit organizations get grant funds from the federal and state agencies and other business entities. Many times, audited nonprofit financial statements have to be submitted as part of these grant proposals and annually thereafter.  This is to make sure that all funds are being used wisely.

Failure to provide audited nonprofit financial statements may cause not getting a grant, or even worse, cancellation of a grant.

 3- Help Identifying Fraudulent Activities

The audited nonprofit financial statements can help identify fraudulent activities in an organization.

 

 4- Increased Donations

Transparency is the key to building a client relationship based on trust and providing annual financial statements audited by an independent auditor is the best way to share organizational information with the donors. Financial Statements help assure institutional and individual donors that their funds will be put to the best use for which a nonprofit organization is established.

Financial auditing is very important to an organization (whether nonprofit or for-profit) and the stakeholders. It is important to engage the right firm as your independent auditor in order to get timely and best valued financial services, such as audited nonprofit financial statements, Form 990 tax returns, compliance reports under the Uniform Guidance, etc.

Tip: The internal auditor can also help you in making your internal system control better and more resourceful.

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