The organization that you manage as a CEO or Executive Director is a non-profit 501 (c). Do you have an external auditor who conducts an annual review of your financial statements? You should and here are several reasons why you not only should, but are required to do so.
One of the most common and frequent reasons non-profit organizations find themselves in trouble with the Internal Revenue Service is their failure to complete an external audit each year. Your board of directors should insist upon an annual audit. If they don't insist, it may be because as volunteers, they don't realize that it is a requirement. As the CEO or Executive Director, you should insist to your board that an annual audit be conducted. Often in a small non-profit where cash flow is tight, the board may suggest that you conduct the audit bi-annually to save money. This is a situation that can be categorized as "penny wise and pound foolish". A well-chosen auditor with solid credentials will not only review the financials but the procedures that are used within the organization as it pertains to sound financial management. Are there sound "checks and balances" in place to minimize the risk of misappropriation of funds? HINT: If the person who receives payments (checks or cash) is the same person who makes the bank deposits, you are setting your organization up for losses. There is much more that is involved in this complex but essential process. Begin by doing your homework and interviewing at least three audit firms before making a choice. To learn more, contact me to discuss how I can assist your organization in achieving organizational best practices.