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  • A-133 Audit Findings, How Common Are They?

  • Avoid Three Common Errors in Budgeting

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  • A-133 Audit Findings, How Common Are They?

    Where does your organization stand?

    In our most recent study of A-133 audit results, we found that about one in five non-profit organization audits resulted in reported audit findings.  This study was based on a sample of the results from 1,200 audits performed by local, regional, and national CPA firms in the Washington, DC Metropolitan area, including Northern Virginia and parts of Maryland.

    We estimated that only 44% of non-profit organizations had no findings in the previous three years. Yes, that is less than half of your peer organizations.



     

    Is Your Organization Considered Low Risk?

    In only about half of the audits sampled, the auditors identified their client as "low risk", generally meaning that the non-profit organization had no audit findings reported in their previous two audits. 

    Internal Control Deficiencies

    About 20% of the audits reported that the audited organization had significant deficiencies in their internal control over financial statement reporting or Federal Award compliance requirements.  About 10% of the audits reported material weaknesses in internal control.

     

    Auditing the Auditors

    For some perspective on these numbers, the grades auditors received from the President's Council on Integrity and Efficiency were less than stellar.  In the Council"s National Single Audit Sampling Project Report on audit quality, only about half of the audits performed by Certified Public Accountants were graded "Reliable", while about one third were graded as "Unacceptable."

    This study illustrates the importance of selecting well-qualified auditors to perform your financial statement and compliance audits.  You want your auditor to apply effective sampling techniques in evaluating your compliance, and to have the experience, and judgment necessary to evaluate audit exceptions, and keep them in proper perspective.  You will also want an auditor that will advise you on how to implement cost-effective procedures that will help prevent future audit findings.

    Your auditor is required to be enrolled in the AICPA Peer Review Program, and to provide you a copy of their most recent peer review report prior to audit commencement.  It is a good idea to review the report. And if the report is other than unqualified, you may want to have your auditor explain what they have done to address the deficiencies identified in their audit.
    05/16/2011