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Financial Reviews vs. Financial Audits: Making the Right Choice for Your Nonprofit
- Financial reviews and audits play crucial roles in assessing a nonprofit's financial health and compliance with rules.
- A financial review by a CPA offers limited assurance about compliance with accounting principles without a formal opinion.
- It is a cost-effective option for smaller nonprofits needing external validation of financial statements.
- In contrast, an annual financial audit involves a comprehensive examination by an independent CPA.
- Audits ensure accuracy, compliance with GAAP, and are required by stakeholders like grantors and regulatory bodies.
- Preparing for an audit requires significant documentation, verification, and involvement from the finance team.
- Financial reviews have lower costs and involve less intensive procedures, suitable for smaller or new organizations.
- Choosing between a review and an audit depends on the level of assurance needed and organizational requirements.
- Organizations can streamline audits with fund accounting software, centralizing data and improving reporting capabilities.
- Integrating fund accounting software with CRM systems can enhance compliance, revenue tracking, and audit trail maintenance.
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