Audit reports aren’t just about compliance or meeting regulatory requirements; they’re treasure troves of insights that can help guide and grow your nonprofit. While many nonprofit leaders view audits as annual tasks to tick off their to-do lists, they miss the strategic opportunities hidden between the numbers and footnotes.
If you’re leading a nonprofit, understanding how to leverage your audit report effectively could save you time, improve processes, and guide smarter decision-making. This guide will help you uncover actionable suggestions buried in your audit report and show you how to use them as a roadmap for greater impact.
Audit reports often feel like dense documents that primarily fulfill compliance requirements. However, when approached with a strategic mindset, these reports articulate your organization’s financial health and operational strengths and weaknesses.
Here’s what your typical nonprofit audit report includes:
These sections offer more than just numbers; each one tells a detailed story about the effectiveness, efficiency, and sustainability of your nonprofit.
Think of your audited financials as a diagnostic report for your nonprofit. It can help you identify risks, highlight strengths, improve transparency, and build donor trust. But to truly benefit, you need to read between the lines.
An audit report can reveal critical areas where improvements will benefit your organization. Here are some of the key insights you can mine from the report and how you can act on them.
The review of internal controls included in your audit can highlight potential vulnerabilities in your workflows. Maybe your cash handling processes need tightening, or perhaps your procedure for approving expenses is too loose, exposing your organization to risks of misuse.
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For nonprofits, one of the most complex but critical areas is managing restricted funds. Whether they’re temporarily or permanently restricted, mishandling these funds can damage donor relationships and increase compliance issues.
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Your audit may highlight areas where operational inefficiencies are costing you time and money. These could include outdated technology, poorly trained staff, or bottlenecks in approval systems.
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Your Statement of Cash Flows and Financial Position can help you spot cash flow issues. For example, Audit findings might suggest creating an emergency fund or tightening up on collection of receivables to ensure sufficient liquidity during lean periods.
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Your audit report offers clues about how well you’re meeting donor expectations when it comes to financial transparency. Properly presented financials can build stronger donor trust and may even improve your fundraising campaigns' success.
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Audits can help you assess whether your resources are being allocated effectively to the programs that matter most. Your Statement of Activities may highlight underfunded initiatives and overfunded ones, helping you reclaim resources for better use.
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A well-utilized audit report allows you to take a proactive approach to your nonprofit’s long-term success. Instead of viewing your audit as a “necessary inconvenience,” see it as a tool for building financial clarity, driving operational improvements, and strengthening your donor relationships.
At SD Mayer & Associates, we specialize in helping nonprofits translate audit findings into actionable strategies. Our advisors go beyond the numbers, offering customized insights to align your organization’s operations with its mission.
Now that you know what to look for, it’s time to start mining your nonprofit’s audit report for those golden suggestions. Whether it’s strengthening your internal controls, building donor trust, or achieving long-term financial sustainability, your audit can point the way forward.
Need help turning your audit findings into practical strategies? Contact SD Mayer & Associates today for a consultation. Together, we’ll ensure your nonprofit thrives.