Might be worth your time to ask your funders if they really need to see audited financial statements. If the only reason you’re having an audit is to meet the requirements of a few foundations, call them to see if they still need it. Perhaps they would be happy with reviewed financial statements.
Here’s an illustration – – One of my clients approached their funding foundations and a few major donors to see if it would be okay to have their financial statements reviewed instead of audited. All of the funders appreciated the financial pressure that existed and were perfectly happy with shifting to a review. That saved the organization around half the cost of the audit in addition to saving their staff a significant amount of time.
Another example — I received a call from an organization to discuss switching their audit to my firm. A particular foundation had required an audit as a condition for the grant some time in the past. I recommended the organization called this foundation to see if they would be willing to accept a review instead of an audit. Wouldn’t hurt to ask and if they said yes it would save scarce dollars. Much to the surprise of everyone, the foundation said that not only did they not need an audit anymore, they didn’t even need reviewed financial statements. They would be willing to accept internal financial statements instead!
The same idea applies if you’re having an audit as a requirement of your loan. Might be worthwhile to call the lender to see if they would be willing to accept a reviewed financial statement.
So, occasionally ask whether you still need to have an audit. You might be pleasantly surprised by the responses.
From my experience, the cost of a review will typically be in the range of 40% or 50% of an audit. In addition to those savings, there is a substantial reduction in the amount of staff time needed to prepare information for the audit and answer questions during fieldwork.
Just in case you think I’m weird to suggest an organization does not need an audit (okay, maybe I am weird, but that’s a separate issue!), my colleagues at several other firms also challenge potential clients to reconsider whether they really need an audit.
Ask the question once in a while.