audit in non profit organization

Topics: Internal audit, Auditing, Non-profit organization Pages: 15 (3945 words) Published: November 14, 2013
OPERATIONAL AUDITING: ACCT 476 / CCAU 525

Internal Auditing in Not-For-Profit
Organizations

TABLE OF CONTENTS

ABSTRACT: .....................................................................................................................................................................2 INTRODUCTION ..............................................................................................................................................................2 SECTION I: CORPORATE GOVERNANCE ..........................................................................................................................3 1. CORPORATE GOVERNANCE REFORMS RELEVANT TO NPOS ....................................................................................................3 2. AUDIT COMMITTEES OF NPOS........................................................................................................................................4 3. RECOMMENDATIONS ....................................................................................................................................................5 SECTION II: RISK MANAGEMENT.....................................................................................................................................6 1. ABSENCE OF RISK MANAGEMENT IN NPO .........................................................................................................................6 2. REASONS FOR RISK MANAGEMENT IN NPO .......................................................................................................................7 3. PROCESS OF RISK MANAGEMENT IN NPO .........................................................................................................................8 SECTION III: INTERNAL CONTROLS................................................................................................................................10 1. AN ILLUSTRATIVE EXAMPLE ..........................................................................................................................................10 2. GOOD INTERNAL CONTROLS .........................................................................................................................................11 3. STRENGTHENING INTERNAL CONTROLS............................................................................................................................12 CONCLUSION................................................................................................................................................................14

1

ABSTRACT:
This paper discusses internal auditing in not-for-profit organizations (NPOs). Specifically, our goal is to identify the role of the internal audit in NPOs by focusing on key areas such as corporate governance, audit committees, risk management and internal controls in NPOs. We will look at corporate governance reforms relevant to NPOs, including provisions of the Sarbanes-Oxley Act that would be applicable to NPOs and some important attributes of the audit committee such as independence of members. We will highlight the role risk assessment plays in NPOs, the reasons to have a risk management function in NPO and the process of risk management. To finish, a focus will be made on internal controls as they are important for all organizations including NPOs for accountability motives. Strong internal controls can help NPOs achieve their mission. Overall, our findings conducted to the conclusion that internal auditing function is very important for NPOs but its application should be carefully studied by taking into account the size and the activities of the NPO.

INTRODUCTION
With all the headlines in the news, past and present, regarding misappropriations of funds being handled by not-for-profit organizations (NPOs), the need for an internal auditing function in these entities now seem more important than ever and that is why this paper will address some of the components...

Bibliography: American Institute of Certified Public Accountants (2005), The AICPA audit committee toolkit: not for
profit organization
Cornacchia, Dan H., Accountants on Board. Retrieved March 16, 2012 from Canadian Institute of Chartered
Accountants: http://www.cica.ca/publications/list-of-publications/manual/item61633.pdf.
Fogarty, T., & Jackson, P. (2005), Sarbanes-Oxley for nonprofits: a guide to gaining competitive advantage.
Gallagher, M., & Radcliffe, V. (2002), Internal controls in nonprofit organizations: The case of the American
cancer society, Ohio division
Larkin, Richard F. (2005), Accounting trends and techniques: not for profit organizations: financial
statement reporting and disclosure practices
Mattie, A.J., Hanley, P.F., & Cassidiy, D.L. (2005). Internal Controls: The Key to Accountability. Retrieved
March 10, 2012 from PriceWaterHouseCoopers: www.pwc.com/education.
Moulton, Gary and Kevin Wilson. (2000, September). Nonprofit fraud: Focus on segregation of duties and
good reporting procedures
http://www.charityvillage.com/cv/research/rlegal17.html
Rezaee, Zabihollah (2007), Corporate governance post Sarbanes-Oxley: regulations, requirements, and
Ruppel, Warren (2006), Not- for-profit audit committee best practices. Hoboken, NJ: John Wiley & Sons.
Verschoor, Curtis C. (2008), Audit committee essentials. Hoboken, NJ: John Wiley & Sons.
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • THE PROVISION OF NON-AUDIT SERVICES FOR AUDIT CLIENTS Essay
  • Essay about non profit and profit organization
  • Non-Profit vs. for Profit Organizations Essay
  • Church, a Non-Profit Organization Essay
  • Non-profit Organization and Budget Essay
  • Profit vs Non Profit Organization Essay
  • Essay on Non-Profit Organizations
  • For profit and non profit organization Essay

Become a StudyMode Member

Sign Up - It's Free