Nonprofit Auditing: To Us, It’s a Full-Time Job

While it’s no secret that many accounting firms are stretched to the limit during tax season, what is less known is that many of those same firms fall back on nonprofit accounting and auditing during their slow time.

That’s a fact that always bothered Borland Benefield Shareholder Jeffrey Chandler. In fact, it bothered him so much that in 1994, he formed the Nonprofit Audit Group. 

“I was always unhappy with the fact that nonprofits could not find accounting firms that were dedicated to them,” Jeff says. “I never liked that other firms would only work on nonprofits during slow times. And even when they did, they would send their junior staff to work on the accounts. That is why we created the Nonprofit Audit Group.”

The Nonprofit Audit Group at Borland Benefield is made up of a team of seasoned auditors who are dedicated year-round to serving the needs of exempt organizations. 

It’s worth noting that specific designation of “year-round.” Borland Benefield’s commitment to the nonprofit sector is so strong that their CPE or Continued Professional Education is focused on nonprofit learning.

What started as a humble little group has grown into a division that now has more than seventy-five nonprofit accounts on its roster.

Defining nonprofit categories

When most of us think of nonprofits, the first description that comes to mind is that of a charity. While charities make up the majority of nonprofits, there are actually 29 different categories of nonprofits – ranging from 501(c)(1) all the way to 501(c)(29). 

The majority of Borland Benefield’s practice concentrates on 501(c)(3) subsection which includes charities although they also do auditing for many 501(c)(6) membership groups, including chambers of commerce and real estate groups. Borland Benefield also works with social groups and recreational clubs, such as country clubs, which fall into the category of 501(c)(7).

“Our group is very familiar with the different classifications and rules which apply to each category,” Jeff says. “For example, when a charity receives over $750,000 in federal funds, they are required to do a Single Audit. The staff of Borland Benefield has navigated hundreds of these types of highly specialized audits.” He adds that the firm also specializes in governmental and municipal audits as well as construction audits. 

Peer reviews: Auditing the auditors

The firm undergoes peer reviews every three years and has received high ratings and no MFCs or “matters for further consideration.” Jeff admits that maintaining this level of quality often takes longer and results in a higher fee, but the firm is not willing to compromise when it comes to quality. In turn, Jeff and the Nonprofit Audit Group at Borland Benefield is responsible for auditing other firms to ensure they are following the rules. 

Some words of warning for nonprofits

COVID and the work-from-home culture have created an environment where fraud can flourish. Now, more than ever, nonprofits need to make sure there are controls in place regarding the handling of finances.

 “Credit cards are by far the most common area for theft,” Jeff says, “and there’s a lot of tricky things a board member with high-level access can do to skim money from a nonprofit.” 

He warns that nonprofits have to make doubly sure they have the infrastructure necessary for their auditors to track the spending of their nonprofit. He warns that as companies get leaner, they have to make sure they still have enough staff to keep a proper eye on their finances. Finally, they have to make sure the board is involved on a regular basis, and Jeff recommends that they create an audit committee and hold risk meetings to review finances. The best way to beat fraud is to get ahead of it.

“We’re proud to have navigated every type of audit when it comes to nonprofits, but we remember to be humble about the work we do. We believe in the bigger mission of what nonprofits are doing, so we’ve designed a group that can give them top-tier auditing services they deserve.” 

That is a sentiment shared by every team member of Borland Benefield.

Steady. Accurate. Consistent.

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