So why have an audit?
Reputation and credibility – An audited set of financial statements can be an important piece of information in presenting your charity’s credibility to future donors. If the donor can see that donations are being managed and spent appropriately then they are far more likely to support the charity. Typically, donors will provide funds with certain restrictions and will gain comfort that the expenditure incurred is appropriately offset. Furthermore, your lenders will typically request audited financial statements as a prerequisite for a loan agreement. Control and process improvement – Whilst an audit is typically focused on the numbers in the financial statements, the insight that an independent auditor is able to provide to your charity’s processes is extremely valuable and will highlight areas of your financial processes that may need attention or tightening up. A good auditor will work with you to suggest improvements to your charity’s administrative systems which could save your charity time and resources. They may also have suggestions for methods that can be done to reduce your charity’s tax and VAT liabilities. At Scrutton Bland our experience in auditing a range of charities means that we are able to benchmark your charity against other similar organisations, to help you understand how you are performing and to suggest areas that can be improved.
How do I choose an auditor? Working with an independent auditor who understands the charity sector is a great place to start. They will know the kind of issues that you face and will be able to work with you and your teams to offer practical solutions and useful assistance. At Scrutton Bland we offer a range of services for the charity sector including audit, accounts, taxation and insurance and we have experienced and friendly specialists in each area who understand how important it is to help you to manage and mitigate the risks you face.
The benefits of having an audit are split into 3 areas:
Assurance - If you are a Trustee or a stakeholder of a charity, then an external audit of your financial statements can give you much greater confidence that the financial position is appropriately presented. You will be able to demonstrate that your accounts are being properly managed and that your accounting systems are producing reliable financial information. This information can then be used as a clear basis to make future decisions. Furthermore, whilst an audit cannot guarantee that fraud is not taking place, it is an important tool in the prevention of fraud. The audit process will assist Trustees and management in highlighting where processes can be improved to reduce the risk of fraud and identify risk areas. A common issue for smaller charities is either the lack of segregation of duties or the lack of in-house financial expertise.
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