Many nonprofit boards receive their annual audit report, listen to a brief presentation, and move on. The report gets filed, the item gets checked off the agenda, and the meeting continues.
That approach can cause boards to miss important context.
An audit report for nonprofit organization oversight can be one of the most useful tools a board has, but only when board members know what to review, what to ask, and what requires follow-up.
Start With the Auditor’s Opinion
The auditor’s opinion is one of the first sections a board should review. It communicates whether the financial statements are fairly presented, and not all opinions say the same thing.
Boards should ask:
- Is the opinion unmodified or clean?
- Does it include qualifications, explanatory paragraphs, or scope limitations?
A clean opinion is positive news, but it doesn’t mean the audit found nothing worth discussing. Boards should ask follow-up questions regardless.
Ask About Findings, Adjustments, and Internal Controls
Even when the overall opinion is clean, the audit may identify matters the board should understand, such as:
- Material misstatements
- Proposed adjustments
- Material weaknesses in internal controls
- Significant deficiencies in internal controls
Boards should also ask whether the auditor issued a management letter or other communication with process concerns, internal control matters, or recommendations for improvement. These comments may not change the audit opinion, but they can still point to issues the board should understand.
Don’t Overlook Compliance and Grant Issues
For nonprofits with restricted funding, grant agreements or donor-imposed restriction findings carry real consequences. Boards should ask directly whether any findings require funder notification, corrective action, or changes to how restricted funds are tracked and reported.
This is especially relevant for organizations operating under federal awards or multiple grant agreements, where compliance requirements can vary significantly.
Ask for a Remediation Plan
When the audit identifies findings or control weaknesses, the board’s job is to make sure management has a clear written plan to address them—not to manage the process themselves.
That plan should:
- Name specific actions
- Assign ownership
- Set deadlines
- Include a process for reporting progress back to the board or audit committee
Without that structure, findings from one audit tend to reappear in the next.
Questions Worth Asking the Auditor
Boards don’t need to be nonprofit auditors, but they do need to ask the right questions:
- What should the board be most focused on from this report?
- Were there any disagreements with management or limitations in scope?
- Which findings should be addressed before next year’s audit?
- Were there any fraud concerns or areas that need closer attention?
- What would make next year’s audit go more smoothly?
Consider meeting with your auditors without management present to determine if there is anything that you might not want to communicate to management in the room
As Bennie Lewis, CPA, President & Partner at Assurance Dimensions, puts it: “The most effective nonprofit boards don’t need to become auditors. They need to understand what the audit report is telling them and what follow-up is required.”
Make the Audit Report Work for Your Organization
An audit report for nonprofit organization oversight is a window into financial reporting quality, internal controls, and management accountability.
Assurance Dimensions provides nonprofit audits that help boards understand audit results, ask better questions, and prepare for a smoother process year over year. Contact us to learn how we can support your nonprofit audit.