Church Audits – Selecting a Qualified Auditor While Keeping Cost Low

A Church may require an audit for many reasons such as 1) to obtain a bank loan 2) a requirement from a regulatory body 3) to ensure that good stewardship is being used in the handling and accounting of the funds 4) to protect the persons elected or hired to offices of financial responsibility from unwarranted charges of careless or improper handling of funds 5) and to build the trust and confidence of the financial supporters of the church that there is proper accounting of their money – trust and confidence leads to improved patterns of financial support.

When you have decided to hire the services of an accountant it is important that you ensure that you hire a qualified, skilled professional. This article will address the qualifications you should look for in your accountant as well as ways to keep cost low. When it is time to hire the services of an accountant it is important to ensure that you know the level of services needed (as this greatly impacts cost) and it is also important to assess the qualifications of the accountant selected. Providing audit request timely will also keep cost down.

Below is an explanation of the three levels of services provided by an auditor; as well as some important factors to consider when selecting an auditor. Auditors provide three types of services listed below. If applying for a loan you should have your auditor communicate with the lending institution to ensure that you get the right level of service required for the loan. The three types of services are:

1) Audit – provides the highest level of assurance on the financial statements. It includes a review of internal controls if relied upon, testing of selected transactions and communication with third parties such as customers, vendors and banks.

2) Review – provides a lower level of assurance than an audit. It consists of discussions with management and analytical procedures applied to financial data. The accountants’ report provides limited assurance.

3) Compilation – consists of preparing financial statements from information provided by the company. The accountants report states that they have not performed an audit or review and that no assurance is being provided. A compilation is the lowest in cost and at times all a bank requires.

Some key items to consider when selecting your church auditor are:

Ensure the auditor is licensed. When engaging an auditor you may wish to verify with the appropriate State regulatory authority that the provider holds a valid, up-to-date license or certificate to perform auditing services

Ensure the auditor is experienced with the unique requirements of church accounting. Ask the auditor for references from other churches that they have audited.

Ensure the auditor is reliable and timely. Ask the auditor or his references about estimated time of completion for the audit. If applying for a loan timeliness is of the utmost importance.

Ensure the auditor is independent. The auditor should not have any financial interest in the church that would affect their ability to render an objective, unbiased opinion.