Realtor association financial audits are not only important for compliance but also to demonstrate your reputation for transparency and integrity. Your members and donors want to trust that you’re managing your finances responsibly and ethically. While these audits can be stressful, with the right preparation and audit firm, they don’t have to be.
Here is a practical overview of how your organization can navigate future realtor association financial audits.
1. Select An Experienced Audit Partner
Realtor associations are considered 501c6 entities, so it’s critical to look for an audit team specializing in nonprofit audits. To be aligned with the complexities of realtor association financial audits, it’s even better to work with a nonprofit accounting and auditing firm that understands how membership organizations function. Look for an auditor who has worked with other associations like yours.
Ultimately, you want an audit team that can efficiently and effectively collaborate with your organization to ensure a timely engagement.
2. Evaluate Existing Reporting Obligations
The National Association of Realtors (NAR) requires all associations, state or local, with revenue above $50,000 to submit annual audited financial statements in the form of an audit opinion or an accountant’s review report. A compilation report is acceptable for organizations under the $50,000 threshold. However, these revenue requirements can change, so it’s essential to stay up-to-date with any potential updates to your reporting obligations. Failure to comply with these requirements can result in costly fines and damage your association’s reputation and standing with NAR.
3. Collect All Necessary Documents
Your audit team will provide a detailed list of required documents before your engagement begins. These could include year-end reconciliations, bank statements, financial policies, fixed assets and depreciation schedules, general ledger summaries, payroll, and other documents. Gather these documents early and review them for accuracy.
General Reminders for Reporting for Realtor Association Financial Audits
Pay attention to financial report requirements that are unique to membership associations.
- Annual dues billing should be recognized properly in your financial statements.
- Deferred revenue on the statement of financial positions needs careful handling as it involves recognizing membership dues over the applicable period.
- Prepayments made by your association for specific services must be recorded accurately to reflect your association’s financial position.
4. Plan a Pre-Audit Meeting
To ensure a smooth engagement, organize a pre-audit meeting with your staff members who will be responsible for communicating with the audit team. During this meeting, assign responsibilities and ensure that everyone knows who to approach with questions during the audit engagement. Designating one point of contact for the auditors can help streamline communication and reduce confusion.
5. Plan for the Audit Team to Begin
Whether the auditors work onsite or remotely, planning for their arrival is crucial. If they are on-site, coordinate details like a dedicated workspace, internet access, and other logistics. For remote audit teams, you’ll still need to set up regular touchpoints and meetings to review the audit process and answer questions. Keep an open dialogue between your main point of contact and the audit team for any updates or changes that may occur during the engagement.
6. Keep Communication Channels Open
Misunderstandings occur during an audit when communication is stifled. Regularly check your email for updates or questions from the audit team. This clear communication is especially important if they are working remotely, as messages can easily get buried in a busy email inbox. Promptly respond to any requests for information and clarify any confusion that may arise.
Prepare for Audit Success
Assurance Dimensions audit professionals work with nonprofits, membership organizations, and their boards to better understand their financial resources and the uncertainties they face. Contact us to help prepare for your next audit engagement with our firm. Our knowledge and experience in various nonprofit industries, fixed fee pricing, and focus on superior audit and assurance service lead to long-lasting relationships with our clients.