Executive Directors and Board of Directors are tasked with many responsibilities essential to the success of a nonprofit organization. It’s imperative they offer leadership and guidance on program management, staff and volunteer recruiting, marketing, community engagement and managing fundraising programs. There is another task management must also address which includes financial reporting requirements. Many nonprofits are required to undergo an audit to satisfy financial, government and other grant issuing organizations. Beyond meeting requirements, the audit can provide useful insights into the organization’s financial vitality. When the relationship becomes mechanical or fails to deliver value, management may elect to issue a request for proposal (RFP) to find a new auditor. This can be challenging because many don’t have experience with the process. To help make the experience as valuable as possible, Barnes Dennig has provided a summary of RFP best practices below.
Non-Profit RFP Best Practices
- Experience – A key area to evaluate is whether the audit firm has experience with your type and size of organization. The more experience and depth of knowledge about the issues and challenges an organization faces, the greater the value which can be provided through shared insights and best practices. Working with a firm that has very little experience with organizations of the same size or focus may diminish the value they can deliver.
- Time Allocation – It’s important to ask bidders about the anticipated time that will be spent by staff on various tasks. This will permit management to compare “apples to apples” and uncover proposals that rely to much or too little on one staff level over another. If there is something that appears out of the norm, then having this information will allow management to understand why estimates are vastly different. It will also give insight into how each respondent manages the audit and what can be expected in terms of partner involvement.
- Pricing – Let’s face it cost is an important factor for many organizations. For this reason, it’s important to clearly understand respondent firm’s pricing structure. Ask for details on multi-year pricing, one-time costs and first year audit costs. Getting this information as early as possible will help to minimize surprises and ensure there are reasonable expectations around the relationship.
- Additional Fees – It’s also important to understand what prior situations have triggered additional fees on other audits. For example, under what conditions would they seek additional fees during the first-year audit? What changes may result in additional fees being charged on subsequent year audits. Knowing this information will permit management to better understand each respondents fee structure and allow for an additional comparison metric.
- Training – Another area the RFP should explore is whether the respondent provides technical training on nonprofit audit regulations to staff. While there are audit principles that extend across multiple industries, there are complex regulations governing nonprofit audits that require additional training. Be sure to inquire about training provided to staff and how often it’s conducted.
Managing the RFP process can be a challenging task, but when you find the right audit firm, the time invested is well worth it. Remember, the more high-quality questions asked in the RFP, the greater the value of responses and information received. If you have questions about the RFP process or need assistance with your next nonprofit audit, Barnes Dennig can help! For additional information call us at 513-929-6004 or click here to contact us. We look forward to speaking with you soon.
Barnes Dennig Non-Profit Experience
The 40-member Not-For-Profit client service team at Barnes Dennig works with more than 300 non-profit and tax-exempt entities, representing more than 20% of the firm’s total client base. Our client service team is the largest group of accounting professionals in the region exclusively dedicated to serving governmental and exempt organizations year-round.
We perform annual audits for about 250 of our not-for-profit clients. This specialization helps our team understand the nuances of the not-for-profit sector, so we can work efficiently and effectively to provide a quality audit in a timely manner. Contact us here to submit your RFP.