Friday, December 2, 2011

10 Questions Your Audit Committee Can Ask External Auditors

We have been visiting with many nonprofit boards this past month presenting the 2011 audit.  What questions should a Board or Audit Committe ask their external auditors?  Here are some to get the conversation started adopted from an article by Boris Feldman:

1. What is your degree of comfort with the company's accounting decisions? How would you characterize the company's aggressiveness/conservativeness relative to other non profits?

2. Did you make any recommendations or suggestions that management did not accept?

3. Are there any employees of the company that you felt were not entirely candid and responsive to you?

4. How would you assess the internal controls at the Organization? What improvements would you make? In what priority?

5. How would you compare the quality of our accounting to other organizations with whom you work?

6. What was your materiality threshold?

7. Are we up-to-date on all of our filings and remittances?

8. Do our investments conform to our investment policy?

9. Are you getting the appropriate cooperation from management? Reluctance to cooperate can signal that there's something to hide.

10. Are there any areas of the financial statements including the notes, in which you believe we could be more explicit or transparent, or provide more clarity to help a user better understand our financial statements?