One of the main responsibilities of a not-for-profit's audit committee is to hire and evaluate the independent auditor. What if your organization doesn't have a separate audit committee? This responsibility then falls to the entire board of directors, but it could be delegated to the finance committee or the executive committee, if they exist. The full board is still responsible to approve the auditors and document that decision in the minutes.
It is important to spend time in reflection and evaluation after each audit, but some organizations overlook this step or aren't sure where to start. The recently published AICPA Audit Committee Toolkit for Not-for-Profit Entities( 3rd edition) takes the guesswork out of managing an audit committee. It includes dozens of useful tools, including a list of questions to consider when evaluating your auditors. The questions focus on the quality of resources and services, quality of communication, and independence and objectivity, as well as questions for management and/or internal audit. These questions are a starting point for the audit committee to consider that may be customized based on the needs of the organization.
This tool takes the evaluation of the external auditor beyond the price discussion. It promotes a value conversation looking at how well the external audit firm makes a difference to the organization in its performance and effectiveness. The end result is to determine if any changes need to be made to the relationship in the following year.
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Not a member? Learn more about these premium resources along with the many other benefits of membership in the AICPA Not-for-Profit Section Membership area.