• Effective Audit Committee Guide

To obtain a balanced perspective, in addition to the financial expert, we recommend two to five additional members with diverse backgrounds and experience. These other individuals should be “financially literate.” This generally means that the committee member must be able to read and understand fundamental financial statements sufficiently to recognize when the numbers along with associated disclosures do not make business sense. This ability, coupled with diligence and an inquisitive attitude, will enable members to ask insightful questions and thoughtfully assess the responses.

As noted previously there are various resources and methods available for finding the right members for your organization.

► BDO INSIGHT
In addition to financial expertise, serious consideration should be given to one’s expertise within a certain industry. For example, charitable organizations have concerns that are unique in comparison to trade associations, while educational institutions and health care organizations have very different issues as well. In addition, some nonprofits operate in more than one industry. These may include, for example, universities that operate a hospital, religious organizations that may operate a broadcasting station or a school, museums that have gift shops, a charity that also owns low-income housing facilities, an association with a publishing affiliate, etc. When evaluating whether members have the required expertise, we believe that audit committees should assess if its candidates have the capacity or background to fully grasp the issues relative to the specific industry or industries that the nonprofit operates in.

Resources

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Contacts

Andrea Espinola Wilson.
Andrea Wilson Managing Partner; Industry Specialty Services National Co-Leader, Nonprofit & Education Practice 703-752-2784
Adam Cole.
Adam Cole Managing Partner; Nonprofit & Education Advisory Practice National Co-Leader 212-885-8327
Laurie De Armond.
Laurie De Armond Assurance Office Managing Partner; Institute for Nonprofit Excellence Executive Director 703-336-1453
Marc Berger
Marc Berger National Director, Nonprofit Tax Services 703-336-1420
Lee Klumpp
Lee Klumpp National Professional Practice Partner – Nonprofit and Government Industries 703-336-1497
See all contacts

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We Wrote The Book

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How to Read Nonprofit Financial Statements: A Practical Guide is a key resource that will help you read, interpret, and use nonprofit financial statements.
 

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Resources

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