An IRS does not require non profit organizations to obtain audits. It is only in rare circumstances do they ask them for audits. Certain state and federal governments require the audits regularly. Financial information of non profit organizations can be as confusing as regular taxes if not more. What needs to be filed and when it needs to be filed together with audit requirements may overwhelm you. Here are some things that you need to know about non profit audits that will help you understand them much better.
IRS audits. IRS rarely ask non profit organizations for audits, except in a few circumstances do they require the audits. Even if they don’t require audits,they have a review process for non profit organizations.Below are some reasons why the IRS would require a review either audit or compliance book:
The information provided on a filed return is inconsistent.
They have received complaints by the public, a federal or state as agency regarding non compliance by an exempt organization.
The Exempt Organizations Division conducts an IRS wide examination.
If a certain return involves issues with another tax payer such as an investor.
Further review is need for a claim for refund or request for abatement.
There are two types of non profit audits. A field audit where an IRS agent visits the offices or any other place where books and records are kept and an office audit where the IRS agent communicates with an organization via phone calls or letters.
Independent audits. These audits are more common than the IRS ones. They occur for a variety of reasons. Sometimes an independent audit is obtained because a non profit organization decides they want to a complete review of their financial record keeping or because of a mandate from a federal agency.
There are several benefits of an audit and here are some of them :
Funding. Obtaining an audit will help your organization receive more funding since some finders will only fund your organization after they have received audited financial statements.
Transparency. Your audit will show your supporters and the general public that you are an honest and legit organization. Even if they are issues, your organization will demonstrate its willingness to face the problem head on and deal with it in an appropriate manner.
Accountability. Obtaining an audit now and then will keep your business accountable and hold its high standards when reporting financial information. This will be very beneficial to your organization as it continues growing.
Improvements.Obtaining an audit will help you find out the areas of your organization that may need some improvement. This is great since you can now improve on those areas and become even more successful as an organization.
Now that you have known all the above information on non profit audits ,you can look for the best non profit audit firm out there. Do your research to find out which company offers the best quality services ,has years of experience ,is reliable and has really good client testimonials in Charlotte, North Carolina.