SIDEBAR: To Audit Or Not To Audit That's The Question

by Rollie Dimos

One way to assess the strength of your financial processes, procedures, and controls is to put them through the scrutiny of an audit. There are a few different types of audits that can assess everything from the strength of your controls to the reasonableness of your financial statements.

Before you decide on what type of audit you need or who will perform it, ask yourself these questions:

• What type of review does your constitution and bylaws require, and how often is this review required?

• Who reads your financial statements, and what are their needs?

• Do you need a review of internal processes to assess compliance with your policies and procedures?

• Do you need to evaluate the effectiveness of a specific finance function, like payroll or accounts payable?

• Do you need complete financial statements for a bank or lending institution?

• How much funds are available for a review or audit?

Your specific needs dictate the type of audit required.

An independent public accounting firm performs a financial statement audit. The public accounting firm will ensure your organization’s financial statements comply with generally accepted accounting principles (GAAP), and a certified public accountant (CPA) will express an opinion on whether those financial statements are relevant, complete, and fairly presented.

A financial statement audit brings your church into alignment with generally accepted accounting principles. This means your church must comply with many of the rules and requirements enacted to protect shareholders.

However, qualified people within your church can perform audits that focus on internal controls, operational effectiveness and efficiency, and ways to reduce risk. Certainly, a local CPA firm can provide this same type of review, but an internal review performed by volunteers in the church can save costs. These volunteers should include qualified businesspeople who are knowledgeable about corporate governance, accounting practices, and risk management.

Rollie Dimos, Springfield, Missouri