Audit Committee

The primary function of an audit committee is to ensure the organization carries out an independent outside audit. Specific duties include:

• hiring an auditor (this is not a staff function!)
• reviewing the audit report with the auditor
• assuring the board that the financial statements reflect the organization's financial condition
• requesting an internal audit from time to time
• verifying all affairs in the organization are conducted ethically

An organization with a complicated financial structure, federal or state funding and various revenue streams should consider annual independent audits if the organization's budget is of a sufficient size to do so. Smaller nonprofits that might experience regular audits financially too burdensome, could choose a review or at least have a professional accountant compile the financial statements. Also, some funders expect their grantees to share their audited financial reports.

Additional references:

Board's Role & Audit Committees-National Council of Nonprofits