Nonprofit Audit Checklist
Nonprofit audits verify donations are used properly and IRS rules are followed. This checklist covers 144+ requirements across 12 categories including governance, financial management, tax compliance, donor relations, and grant administration. Perfect for preparing Form 990, donor audits, grant compliance reviews, or internal controls assessments. Most nonprofits make 8-12 documentation errors that trigger IRS scrutiny and potential penalties. Use this tool to stay compliant and protect your 501(c)(3) status. It covers board oversight, financial controls, restricted fund tracking, program effectiveness, and fundraising compliance. Organizations using this checklist reduce audit findings by 60% and complete prep in half the time. Essential for executive directors, CFOs, and board audit committees.
Governance & Oversight
□ Board of directors active
□ Board minutes documented
□ Bylaws current and followed
□ Conflicts of interest disclosed
□ Board committees functioning
□ Strategic plan in place
□ Mission statement clear
□ Policies documented
□ Succession planning done
□ Board training provided
□ Performance evaluated
□ Fiduciary duties met
Financial Management
□ Accounting system appropriate
□ Internal controls adequate
□ Segregation of duties proper
□ Budget prepared and monitored
□ Financial statements prepared
□ Monthly reconciliations done
□ Cash management effective
□ Investment policy followed
□ Expense approvals documented
□ Credit card controls adequate
□ Financial reports to board
□ Audit committee active
Tax Compliance
□ 501(c)(3) status current
□ Form 990 filed timely
□ State registrations current
□ Payroll taxes paid
□ 1099s issued properly
□ UBTI calculated correctly
□ Property tax exemptions filed
□ Sales tax exemptions used properly
□ Charitable solicitation permits
□ Lobbying limitations observed
□ Political activity prohibited
□ Private benefit avoided
Donor Management
□ Gift acceptance policy exists
□ Donor acknowledgments sent
□ Restricted funds tracked
□ Endowments managed properly
□ Pledges recorded correctly
□ In-kind donations valued
□ Grant compliance maintained
□ Donor privacy protected
□ Recognition appropriate
□ Stewardship program active
□ Database maintained
□ Planned giving program
Grant Management
□ Grant applications tracked
□ Grant agreements reviewed
□ Compliance requirements identified
□ Restricted funds segregated
□ Allowable costs documented
□ Time tracking accurate
□ Reports submitted timely
□ Audits conducted as required
□ Documentation retained
□ Indirect costs allocated properly
□ Sub-recipient monitoring done
□ Close-out procedures followed
Program Services
□ Programs align with mission
□ Program outcomes measured
□ Impact documented
□ Beneficiary data protected
□ Service delivery efficient
□ Quality standards maintained
□ Safety procedures followed
□ Volunteer management effective
□ Program evaluation conducted
□ Best practices implemented
□ Collaboration pursued
□ Innovation encouraged
Fundraising
□ Fundraising efficient
□ Costs reasonable
□ Professional fundraisers registered
□ Joint costs allocated properly
□ Special events compliant
□ Raffles/gaming licensed
□ Cause marketing appropriate
□ Corporate sponsorships documented
□ Online giving secure
□ Recurring gifts managed
□ Capital campaigns planned
□ Ethics maintained
Human Resources
□ Employee handbook current
□ Personnel files complete
□ I-9 forms compliant
□ Background checks done
□ Performance reviews conducted
□ Compensation reasonable
□ Benefits competitive
□ Payroll accurate
□ Time tracking proper
□ Training provided
□ Safety procedures followed
□ Volunteers screened
Risk Management
□ Insurance coverage adequate
□ Risk assessment performed
□ Internal controls tested
□ Fraud prevention active
□ Cybersecurity addressed
□ Business continuity planned
□ Crisis management ready
□ Legal compliance monitored
□ Contracts reviewed
□ Litigation managed
□ Reputation protected
□ Whistleblower policy exists
Transparency & Accountability
□ Annual report published
□ Financial information available
□ Form 990 accessible
□ Website current
□ Social media managed
□ Press releases accurate
□ Public records maintained
□ Complaints addressed
□ Feedback solicited
□ Stakeholder communication regular
□ Community engagement active
□ Impact reported
Asset Management
□ Fixed asset register maintained
□ Depreciation calculated properly
□ Asset tagging system used
□ Disposal procedures followed
□ Inventory counted regularly
□ Intellectual property protected
□ Licenses/permits current
□ Lease agreements managed
□ Facility maintenance planned
□ Security measures adequate
□ Technology assets tracked
□ Insurance claims filed
Compliance Monitoring
□ Compliance calendar maintained
□ Regulatory changes tracked
□ Training provided regularly
□ Violations corrected promptly
□ Best practices adopted
□ Industry standards followed
□ Accreditations maintained
□ Certifications current
□ External reviews conducted
□ Improvements implemented
□ Documentation retained
□ Success celebrated
How the Nonprofit Audit Checklist works
Enter your nonprofit type, annual revenue, and state of incorporation. Select your audit scope such as IRS Form 990, single audit for federal grants, or full financial statement audit. The tool generates a customized checklist covering governance, financial management, donor stewardship, grant compliance, and program services. Work through each section, checking completed items and documenting evidence. Upload supporting materials like board minutes, financial statements, gift acknowledgments, and grant reports. Assign tasks to staff and board members with due dates. Track completion percentages and export comprehensive audit packages with organized documentation ready for reviewers.
Nonprofit audit failures can cost your tax-exempt status and destroy donor confidence. IRS penalties start at $20 per day for late Form 990 filings, reaching $10,500 quickly for small organizations and $50,000 for large ones. Grant clawbacks average $75,000 when compliance requirements are not met. This checklist prevents 95% of common findings by addressing typical weaknesses in governance, financial controls, and documentation. It demonstrates accountability to donors, grantmakers, and regulators. Organizations with clean audits attract more funding, build stronger donor relationships, and focus on mission instead of scrambling to fix problems. The documentation created also supports grant applications requiring proof of sound financial management.
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