Questions the board and management should be asking each other

If you are on an audit committee of a public, private, or nonprofit organization, below is a menu of questions you may wish to address to management, other board members, and/or your external auditor.

  1. What are our priorities for the year and have they changed?
  2. What is the emphasis of our actual budget spending?
  3. Is our actual spending still consistent with our priorities?
  4. Are our priorities for the year being executed as expected?
  5. What course corrections are necessary to ensure we meet our priorities for the year?
  6. How much cash are we supposed to have on hand?
  7. What is our action plan if/when cash falls below that level?
  8. If we have donor requirements that have not yet been met, have we set aside the cash needed to fulfill those requirements?
  9. Last year, did we put off paying any bills or paying any taxes because we were short of cash?
  10. Did we borrow during the year in order to have enough cash?
  11. How much of our current cash is from subscriptions, memberships, or tuition whose promised services and related expenses are yet to be incurred?
  12. Are there any lawsuits or grants that are being questioned that might result in forfeiture of some cash?
  13. If we take away any use of endowment income or principal, any use of borrowing, and any exceptional (one-time) gifts, did revenues equal or exceed expenditures?
  14. What are our policies on collecting and when do we declare them uncollectible?
  15. Are these policies being followed and are they adequate?
  16. If we were forced to repay all our debts at one time, do we have enough assets which we could immediately convert to cash so that we could pay off those debts?
  17. Is it clear who is responsible for ensuring the budget ends in balance? (You may be surprised to find the roles of the board and the executive director are ambiguous in this regard.)
  18. If the executive director is responsible, does he or she have sufficient authority to take actions during the year to maintain balance, or is board action required to change spending?
  19. If the board doesn't take action when the executive director requests, who then is responsible for budget balance?
  20. Are there specific consequences for either the board or executive director if the budget is not balanced?
  21. Are there specific consequences for either the board or executive director if initiatives fall behind schedule or fail to achieve their objectives?
  22. Are the staff able and skillful enough for the duties they are assigned?
  23. What are all the adjustments or suggestions the auditor has and what is their significance?
  24. Is there anything now or in the next year that would lead the auditor to have serious concerns about the health or viability of the organization? Are there any questionable financial transactions between the organization and board members or staff?
  25. Who on the board and staff worked with the auditor during the audit and what was their level of cooperation and preparation?