Ways to Reduce Your Audit Costs
A recent survey of community-based nonprofits showed average audit fee increases of 9%, and noted that audit costs remain a significant burden to organizations. Newer risk-based audit standards require auditors to obtain a deeper understanding of nonprofit organizations and their internal control systems which has led to dramatic increases in both time and fees of CPAs. Staff time on the audit has expanded as they’re forced to respond to more in-depth audit inquiries concerning internal controls and the presence of risk.
There are some ways your nonprofit can ease the cost burden of an audit:
Have a review instead of an audit.
If your organization is not mandated to have an audit, have a review which is a lower level of assurance, but still valuable. A review can attest that your organization’s financial statements are in accordance with GAAP.
Correct any weaknesses in your systems of internal control.
As a general rule, the weaker your systems, the more time the auditors will need to spend.
Talk to your auditor about modifications.
Ask the auditor to seek permission to perform the audit on the cash basis of accounting, rather than the accrual basis as required by GAAP. This saved one nonprofit approximately $2000 in fees.
Fees are not always set in stone. Talk with your auditor, especially if there has been an increase in fees to see if the cost can be negotiated down. One nonprofit was successful in getting an 11% reduction from the requested fee increase.