From time to time, I get asked about ways to audit the finances of a congregation. Here’s a brief overview of three possibilities. It has been adapted from an original uumoney post by Don Mohr from the UU Congregation of Columbia, SC. Refer to the article, Three Options for Auditing the Finances, to read more.
The goal of a compilation is to take information that is on the general ledger and accumulate it into financial statements in the same format that would come out of a review or audit. The key sentence of a compilation report from the accountant reads, “We have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or any other form of assurance on them.”
The goal of a review is to provide limited assurance that financial statements do not have any known errors or departures from the accounting rules found in GAAP. The key sentence in a review report reads, “Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles.”
The goal of an audit is to provide reasonable, but not absolute, assurance that financial statements are fairly presented in accordance with GAAP. The key sentence in an audit report reads, “In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of [organization name] as of June 30, [year], and the changes in its net assets and its cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.”