What is a compliance audit?
A compliance audit is when an auditor is asked to form an opinion on whether or not an organization complied with the requirements of an agreement. Nonprofits are frequently subject to a compliance audit if they receive significant funding from local, state or federal governmental sources. The compliance audit is done concurrently with the financial statement audit. The auditor will spend time in a compliance audit looking at the specific requirements of the agreement(s) requiring the compliance audit and testing internal controls over important tasks that relate to compliance requirements. A compliance audit also involves reviewing and testing detail related to transactions specific to the agreement(s) requiring the compliance audit.
Does my nonprofit need a compliance audit?
Currently, all nonprofits that expend $750,000 or more of federal grant funds during a fiscal year require an audit to be conducted according to The Office of Management and Budget's (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (commonly called "Uniform Guidance"). The Uniform Guidance – a "government-wide framework for grants management" – is an authoritative set of rules and requirements for Federal awards that synthesizes and supersedes guidance from earlier OMB circulars, such as OMB Circular A-133. This type of compliance audit is referred to as a “Single Audit.”
Your nonprofit may be subject to a compliance audit even if it doesn’t meet the threshold of $750,000 in federal grant spending. Some of the nonprofits we work with have a requirement in grant agreements have an audit conducted according to Generally Accepted Government Auditing Standards (GAGAS), commonly referred to as the "Yellow Book.”
What is the cost of a compliance audit?
A compliance audit conducted by Taylor Roth is done concurrently with the audit of the financial statements. The compliance audit requires additional time and so the cost of the audit typically increases by at least $1,500.
What are the deliverables for a compliance audit?
At the conclusion of the compliance audit, your nonprofit will receive all of the deliverables provided in an audit, in addition to a separate compliance report.