Required audits for outside and nonprofit agencies?

Patrick Cox
Patrick Cox asked

The City of Charlottesville, is currently discussing whether or not to require agencies and nonprofit organizations that recieve public funding from the city to have formal audits done on their organization. Inquiring if any other jurisdictions require this and if so what are the specific requirements you have? Such as, are audits done annually, every five-years, etc.


Roderick Wood

A couple of factors to consider. 1) How large is the organization, if it is fair sized organization, it should already be doing an audit and so requiring one is not an unreasonable requirement. If it is a small organization doing good things an alternative is to have the organizations accountant provide a certified financial statement signed under penalty of perjury as to the accounts. 2) How much money do you give the institution, if it is $5,000 and a small organization, the audit could be as much as your grant and thus an unreasonable request. 3) Beyond the financial statements, the city or agency should do its own review of the program and require a mid-year and year end report stating how the city or agencies money was expanded and validating that it accomplished the purpose for which it was given. This is no different then what should be done on city programs to assure effectiveness or with city contractors to assure that your got what you paid for in the contract. Always a bad day when pick up the newspaper and discover that the program money was used for other purposes or that the Board or staff have been taking some elaborate trips or eating in elaborate restaurants. "Trust, but Verify."

Richard Brown

When you have this discussion are you considering in kind services that the city might provide to support an organization; like cutting grass and lining ball fields. In some cases the in kind support may be more significant than cash contributions and in most cases would be unaudited. Also and audit of a non-profit doesn't always tell you whether its meeting its objectives and is being effective.

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Mar 5 2013
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