The Role of Board Members During an Audit

The Role of Board Members During an Audit

In the not-for-profit landscape, audits play a crucial role in ensuring financial transparency and accountability. For board members, understanding their role during an audit is essential to fulfilling their fiduciary responsibilities and maintaining the trust of members.

Here’s a comprehensive look at what board members need to know and do during an audit.

Understanding the Audit Process

An audit is an independent examination of an organisation’s financial statements and practices. It aims to provide an objective assessment of whether the financial reports accurately represent the organisation’s financial position and comply with relevant laws and regulations.

As part of the reporting obligations to the Australian Charities and Not-for-profits Commission (ACNC), some charities must submit financial reports that have either been reviewed or audited. Medium charities are required to submit financial reports that have either been reviewed or audited. Large charities must submit audited financial reports. Ensuring compliance with these requirements is a crucial responsibility of the board.

Key Responsibilities of Board Members

Pre-Audit Preparation:

• Selecting the Auditor: One of the primary responsibilities of the board is to select a qualified, independent auditor. The board should ensure that the auditor has no conflicts of interest and possesses the necessary expertise to handle the audit effectively. This selection will need to be passed through at a General Meeting ahead of time.
• Defining the Scope: The board must work with the auditor to define the audit’s scope, ensuring that all critical areas are covered. This includes agreeing on the timeline, fees, and any specific areas of concern that need detailed examination.
• Reviewing Financial Policies: Prior to the audit, board members should review the organisation’s financial policies and internal controls. This assists in identifying potential areas of risk and ensuring that appropriate measures are in place.

During the Audit:

• Providing Information: Board members must ensure that the auditor has access to all necessary information and documentation. This includes financial records, meeting minutes, and any other relevant materials.
• Facilitating Communication: Open and honest communication between the board, management, and the auditor is vital. Board members should be available to answer questions and provide additional information as needed.
• Monitoring Progress: The board should regularly check in on the audit’s progress, addressing any issues that arise promptly. This assists in keeping the audit on track and avoiding last-minute surprises.

Post-Audit Actions:

• Reviewing the Report: Once the audit is complete, the board must carefully review the auditor’s report. This includes understanding any findings, recommendations, and the overall opinion on the financial statements.
• Implementing Recommendations: The board should work with management to implement any recommendations made by the auditor. This demonstrates a commitment to continuous improvement and financial integrity.
• Communicating Results: Transparency is key. The board should communicate the audit results to stakeholders, including members, and regulatory bodies. This assists in building trust and showing accountability.

How We Can Assist

At The Breakthrough Office, we understand the unique challenges not-for-profit organisations face during audits. Our comprehensive audit support services are designed to assist board members in navigating the audit process smoothly and efficiently.

We offer:

• Audit Preparation: Assisting you in gathering and organising all necessary documents and records to ensure you are audit-ready.
• Auditor Liaison: Acting as a point of contact between your organisation and the auditor to facilitate clear and effective communication.
• Post-Audit Support: Assisting with the implementation of audit recommendations and developing strategies to improve financial practices.

Our team of experts is here to provide the guidance and support you need to ensure your audit is a success.

Contact us today to learn more about how we can assist your organisation in maintaining financial transparency and accountability.

Conclusion

Board members play a pivotal role in the audit process, from preparation to post-audit actions. By understanding their responsibilities and working closely with auditors and management, they can assist in ensuring that the organisation’s financial practices are transparent and trustworthy. At The Breakthrough Office, we are committed to supporting not-for-profit organisations through every step of the audit process, ensuring that you can focus on your mission with confidence.