In the interests of good corporate governance and transparency, non-profit organisations should conduct annual external audits. Such audits provide potential and existing donors, stakeholders, beneficiaries, sponsors and regulators, with key insights into the workings of the organisation.
Annual external audits also help non-profit organisations to improve their systems of internal control and risk management, and identify areas where best practices can be optimised in order to achieve the best possible impact given available financial resources and manpower.
Appointing an external audit firm can be a costly exercise, but you might be able to come to some sort of arrangement based on the non-profit status of your organisation.
The audit should be carried out after the close of the non-profit organisation's financial year-end.
Here are some of the steps that a non-profit organisation would need to take in order to appoint an auditor, complete the audit fieldwork, table the audited accounts before the members of the society (if your non-profit is a registered society registered under the Societies Act, 1966) at the next AGM and lodge the annual returns within the deadline.
Basic steps:
- Close the books (check the financial year end of your organisation, which will be stated in the Constitution);
- Identify an audit firm ;
- Prepare and circulate a resolution to appoint audit firm;
- Issue a nomination letter to the audit firm;
- Get a consent to act letter issued by the audit firm;
- Meet with the auditor and hand over the relevant files, receipts and other documents;
- Liaise with the auditor during the audit fieldwork period - this will entail answering questions and providing additional documentation where needed;
- Review the draft audit report once ready;
- Obtain signatures of the President and Treasurer (or other authorised signatory)
- Prepare and circulate a resolution to approve the audited accounts for the financial year under review;
- Table the audited accounts for adoption by the members, at the next AGM; and
- Once adopted, prepare to submit annual returns with the Registry of Societies (ROS) by extracting the relevant sections from the audited accounts and key into the online e-ROSes system under the financial section.
