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Why Have An Audit?

Why Have An Audit?

February 10, 2014 96 Comments

There are many reasons to consider an audit of your church’s financial statements by and independent CPA firm. While certainly not comprehensive, here are six valid reasons your church should have an audit:

It’s required

Most churches don’t engage an independent CPA firm to perform an audit because it sounds like fun; rather, they are required to do so. This can be for a variety of reasons. Many lenders require audits as a loan covenant. Or sometimes, the church’s articles or by-laws require an audit. Finally, there may be denominational requirements compelling them to do so. There are many benefits of an audit, so don’t let the requirement scare you.

Transparency in your financial controls and reporting

There are various areas where transparency in a church environment can be very beneficial. That transparency begins with your management team or staff. Another area where this is critical is with your finance team or other key volunteers. Finally, this can be very important with your congregation, though often not with the same level of detail that might be provided to your staff or leadership, or certain outside parties.

Accountability to financial oversight

Even with the best intentions, business administrators are charged with a large amount of financial oversight. Having experts “come behind” ensures that every effort is made to report fairly and accurately in all material respects.

Deterrent to would-be embezzlers

An audit is not designed to catch any and all fraud, but knowing that there’s an audit can prevent the attempt. Like a known speed trap on a commonly driven road…the officer doesn’t ticket every speeder, but most people won’t speed.

Education about current topics and issues in church accounting

It is difficult to stay current on all topics facing business administrators. CPE and other education opportunities are available, but nothing replaces having an independent CPA who is familiar with the church environment present in your office from time to time.

Credibility to lenders and other external parties

Having an audit completed before a lender requires it is a great way to gain credibility as an astute organization that is ahead of the curve in financial prudence.

Have you encountered other reasons for having an independent CPA conduct an audit of your financial statements? Share your story by commenting below.

To find out more about PSK and how they can help your church, visit www.pskcpa.com.

Filed Under: News

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