Working with or volunteering for a non-profit can be an incredibly rewarding experience, but it comes with its own set of challenges. One of the most important things you need to think about as your non-profit grows is financial accountability and transparency. A key way to ensure that your finances are in order and that you are accountable to your donors, board members, and stakeholders is through an audit. But do you actually need one? Here’s what you should consider. 

Legal Requirements 

Whether your non-profit requires an audit often depends on its size and revenue. The Australian Charities and Not-for-Profits Commission (ACNC) and state-based regulations set out guidelines about when an audit is required. If your non-profit has annual revenue as low as $250,000, it’s possible that your organisation will need to have an independent audit or review.  It’s important to check the ACNC or your state’s regulations (or speak to an accountant or auditor) to ensure you comply with your legal requirements. Even if your non-profit doesn’t meet the revenue threshold, there might still be other factors that call for an audit. 

Funding and Grants 

If your non-profit relies on grants, government funding, or large donations, having an audit is often an important pre-requisite to secure these funds.  An independent audit acquittal offers reassurance that the funds are being spent in line with the intended purposes, and that the management of finances within the organisation are appropriately controlled and recorded.  

Board and Stakeholder Confidence 

Even if you’re not legally required to undergo an audit, having one can still be of benefit. Typically, decision making responsibility rests with your senior management and the board. An audit gives additional comfort and confidence to your board members, donors, members and other stakeholders that your organization is financially accountable and the financial reporting is accurate. 

Building Better Organisations 

Another reason to consider an audit is that it can help identify weaknesses in your financial systems and internal controls. If you’ve been growing quickly or have a large number of transactions, an audit can help pinpoint any issues that might cause problems down the road. Catching small issues before they become big problems is crucial to keeping your non-profit on track and building a better organisation for the future. 

Conclusion 

While audits are mandatory for many Australian charities and not-for-profits, even smaller organizations should consider them for the added benefits of transparency, donor trust, and financial insight. An audit ensures your non-profit is in the best shape possible, allowing you to focus on your mission while maintaining accountability and financial health. Whether you’re legally required to have one or not, an audit is a valuable tool to safeguard your not-for-profit’s financial future and fostering confidence among stakeholders.