Auditing NFP Organisation

Auditing NFP Organisation

Not-for-profit organisations

NFPs have no external shareholders, dividends or profit maximisation objective either.

Potential audit problems:

~Lack of segregation of duties (small staffing)

~Unqualified volunteers (poor knowledge of controls)

~Less formalised systems

~Donations without audit trail

~Difficulty in assessing going concern (unpredictability of donations)

Audit Implications

Value for money audits (see earlier)

Concentrate on substantive procedures

(due to possible weak internal controls)

Analytical reviews and management representations

(where little audit trail)

Test larger % of population due to smaller volumes

Reporting

If required by law = Normal audit report

If voluntary = Reflect objective of audit

In either case - follow the accepted structure:

1 Addressee

2 Scope

3 Responsibilities of auditors & managers

4 Work done

5 Opinion

6 Date, name and address of auditor

Multiple Choice

One of the problems of auditing a Not for profit organisation is that often donations don't have _________ ?

• An audit trail

• A true purpose

Multiple Choice

Non for profit organisation usually have small staff and less formalised systems.

• true

• false

Multiple Choice

Auditing not for profit organisations often means concentrating on _________ procedures

• substantive

• control

Multiple Choice

Which of the following is a potential problem in auditing not for profit organisations?

• lack of segregation of duties

• less formalised systems

• unqualified volunteers

• all of the choices