Nonprofit organizations, much like public companies, rely on their external audit firm to perform a quality engagement. The audit committee plays a critical role in the governance of nonprofit organizations and one of the tasks assigned to this group is the evaluation of the audit firm.
The AICPA’s Audit Committee Toolkit for Not-for-Profit Entities (3rd Edition) contains a chapter devoted to the evaluation of the audit firm, including the following excerpts of considerations:
Quality of Resources and Services: Does the audit team identify and discuss appropriate risks in planning the audit?
Quality of Communications: Is the auditor comfortable raising issues that would reflect negatively on management?
Independence and Objectivity: Are you confident that the audit team maintains appropriate objectivity and professional skepticism?
Questions for Management: Are you satisfied with the knowledge, skills and abilities of the staff assigned to the audit engagement?
These queries, and many more, can be found in the Toolkit referenced above. If you don’t have access to this valuable document, consider joining the AICPA’s Not-for-Profit Section where you can find resources devoted to assurance, financial accounting & reporting, governance & management and tax compliance.
As always, feel free to contact Eide Bailly with any questions regarding this topic!