A Few Words
If you own or operate a nonprofit company or church, your state may require you to have a certified audit of your institution. Certified audits are a way to protect public trust in many nonprofit organizations. The IRS doesn’t require certified audits, but they are mandated by Attorney Generals of many states. But even if you aren’t a nonprofit or a church, a certified audit gives you a snapshot of your organization’s financial health.
Our firm delivers trust and transparency with every certified audit. We are NY Certified Public Accountants, a top rated CPA New York firm.
Some states require a certified audit for specific conditions, such as when your organization has received:
- Gross contributions over a threshold amount, typically in the range of $200,000
- An excessive amount of funds from a professional fundraiser
- Contributions from the sale of merchandise, services provided and cash donations
Your institution can incur penalties from these states if you do not comply with these rules. You must send the results of a certified audit if your state requires it. Penalties include losing your right to solicit funds in your state. Certified audits are generally kept on file at your state’s Attorney General’s office
WHAT IS A CERTIFIED AUDIT?
A certified audit is a procedure for reviewing your organization’s state tax return, including the income and expenses. The experienced certified public accountants at our firm with office locations in NYC provide their professional opinion on whether your financial statements match up with the financial position of your institution. Your financial statement includes the statement of activities, statement of financial position, cash flow statement, and any notes that pertain to those statements.
If your organization has voluminous transactions, it may not be possible for a qualified accountant to test them all or to be completely knowledgeable of all your company’s activities. If this is the case, your CPA checks a random sampling of your transactions and then presents a statement attesting that they are reasonably assured that your financial statements are accurate. While no CPA could say definitively that your financial statements are perfect in this instance, it’s safe to say that your financial position seems to be fairly represented by your financial statements.
HOW TO DETERMINE IF YOU NEED AN AUDIT
Call our firm at 646-785-4651 to find out if your organization needs a certified audit. A personal, top NYC CPA can answer your questions while asking several — all in service to help you make the correct decision. When you call, be ready to answer several questions, such as:
* Does your bank loan have a stipulation that requires an audit? It’s a common requirement of loans provided to churches and nonprofits.
* Does your organization or by-laws mandate an audit? If so, contact the top New York accountant for a timely and thorough certified audit.
* Do you anticipate a new fundraising or building campaign in the foreseeable future? If you are — and your project will be financed by a bank loan, it’s likely the bank will ask for audited financial records and statements. It often helps your ability to qualify for the loan if you provide them with a prepared audit. Otherwise, you may appear unprepared if you meet with a lender without one.
* What’s the size of your organization? When an institution grows to a certain size, it’s advisable to have outside professionals like our firm conduct accounting or audit services. The rule of thumb is to hire a best CPA in NYC to conduct an audit if your organization has gross income of $1 million or more. If your organization brings in this much revenue, you’re now a viable entity in the business community, so you’re expected to conduct professional and ethical business practices. This typically includes having audits of financial statements.
* Does your institution receive private or government grants? Or are you preparing to apply for one? Most granting agencies only release funds after receiving your certified audit.
When your organization reaches a certain size, you’ll find many reasons to get a certified audit. It’s unavoidable. With smart planning, you can anticipate the requirement for an audit and build the cost of a certified audit into your budget.
Not all institutions in the Manhattan and New York City metropolitan area require a certified audit, so if you’re unsure, consult with our firm for answers and a path toward financial success. During the process of determining if you need an audit, your CPA ascertains whether you need other accounting services. This isn’t a sales technique; it’s a way to find other important tools to help you sustain the growth that you’ve worked so hard to achieve.
BENEFITS OF CERTIFIED AUDITS
It may seem on the surface that others — bankers, investors, donors and accountants, for example — benefit from a certified audit. But your organization benefits too. Having a certified audit done can:
*Provide comfort and peace of mind to you, your executives and your stakeholders when everyone involved in your organization knows that a third party can come in to inspect your financial records. It gives your management accountability and credibility.
*Clean up your records and books at least once a year. It’s easy for any business to get behind on financial statements and records, but falling too far behind in recordkeeping can severely threaten your finances. Having a NYC CPA auditor visit once a year helps keep your financial records on schedule and in order.
*Help your organization keep up-to-date on accounting, legal and tax issues. Trust your financial records with the professionals from our firm. They’re aware of all the tax laws and modifications to the rules that affect your financial statements and your unique situation.
*Produce a comprehensive management letter, which compiles all the findings of the CPA audit team — including the results of questionnaires, interviews and transaction testing. This letter illustrates strengths and weaknesses of your organization’s financial status, as well as suggestions for improvements. A comprehensive management letter can help you manage your finances in the future to allow for more profit and accountability.
Do you have questions about services we offer including Certified Audit in NYC and Long Island? Would you like to receive a personal Certified Audit consultation customized to your specific needs? To schedule an appointment with top New York accountant, our firm, please contact our Long Island or NYC tax accountants for a CPA consultation.