Questions an Audit Committee Should Ask
The audit committee is where the rubber meets the road for accountability, accuracy, and reliability of financial and management information. The audit committee should develop a portfolio of questions which it routinely asks over the course of every year.

• What are our priorities for the year and have they changed?
• What is the emphasis of our actual budget spending?
• Is our actual spending still consistent with our priorities?

Click here for more questions that should be asked every year.

Email us with your ideas for questions audit committees should ask!

Need more?  Read how we can work with you or present a workshop to hone these ideas.

Unfamiliar terms?  See our glossary.

Excerpts from Linking Mission to Money
The most important relationship for an audit committee is with the external auditor and how well the committee takes full advantage of its annual meeting to accept the audited financial statements. Click here for an excerpt from Linking Mission to Money

Articles of Interest for Audit Committees
Nonprofits must understand law to avoid political activity problems  explains IRS rules for 501(c)(3) organizations regarding voter education and registration, candidate forums, and political activity by nonprofit executives and board members.  Because of the complexity of the law, many nonprofits choose to remain silent during an election campaign.  That's unnecessary, but it is vital the organization become familiar with the rules and the resourcs the IRS makes available.

5 ways nonprofits can make their audit committees helpful, effective  describes how the audit committee can become one of the most useful board committees by making its most important role the improvement of the nonprofit's operations.

Questions a nonprofit needs to ask to ensure its budget is on the mark  provides tools the audit committee should use for a systematic review of budgetary outcomes, reports, and procedures.

Reviewing a nonprofit's cash position heads off trouble, helps planning  identifies the key questions every board should ask to ensure cash problems do not compromise the organization's mission.

What financial statements can never tell a director  provides useful suggestions on way to probe beyond what financial statements report.

Fixing account isn't enough to deter scandals argues that tighter internal reporting is essential in order for boards to see problems before they become crises.

Helping non-profit boards get down to business: Essential Questions Concerning Financial Oversight for Non-Profit Boards  is a useful guide for nonprofit audit committees. Contact the publisher, Greater Columbus Arts Council 614-224-2606 for a copy; click here to see excerpts.

Nonprofits poorly treated by restrictions on funding  discusses the unforeseen burdens of donor restrictions and how they may actually weaken the financial sustainability of a nonprofit.


Other Resources
The board audit committee's oversight of internal audit is critical to the sound running of an institution.  Click here to read what Moody's Investors Service views as the five best practices for board oversight of internal audit. 

Click here for KMPG's latest guidance for board audit committees. 

Click here for working tools for small company financial reporting from COSO, the Committee of Sponsoring Organizations.

IRS Form 990 is rapidly becoming the first place a donor looks to get information about a nonprofit. Ideally, the nonprofit audit committee should review and approve its Form 990 before it is filed with the IRS.  Unfortunately, it is becoming apparent that audit committees pay too little attention to the accuracy and consistency of their 990 filings.  Read this January 2007 article in CFO magazine to understand this emerging source of criticism of nonprofit board oversight, particularly of fundraising and administrative costs.

Click on this link to see what a Form 990 looks like. Guidestar is a free web site that allows users to quickly search for and access the Form 990 filings for any nonprofit in the United States. Click here for instructions on how to access Guidestar.

The IRS has released a significant redesign of Form 990 for filings for Tax Year 2008 (filed in 2009). 

        Review the changes here   

       An easy-to-read summary of the most significant changes affecting nonprofits can be found here. 

       Review the draft instructions for the new form here.

Note:  Beginning in 2008 nonprofits with less than $25,000 in gross receipts no longer are exempted from filing.  See this IRS announcement.

Find IRS forms, instructions, and publications for nonprofits (click here). 

For information on how the Pension Protection Act of 2006 affects the tax law for tax-exempt organizations click here. 

A good site for resources on board governance, as well as its Board of Directors Talent Bank

The National Economic Development and Law center offers a free document (PDF) regarding many of the legal ramifications of creating a business venture out of a nonprofit.