Frequently Asked Questions (FAQs)

What regulations do nonprofits who are receiving Federal and State Funding have to meet?

Nonprofits that receive federal and state funding are required to adhere to the regulations and guidelines set forth by the funding source. Depending on the type of funding source, nonprofits may need to meet certain requirements such as financial transparency, program management, and reporting. Additionally, nonprofits may need to meet certain eligibility criteria and comply with any applicable laws or regulations. It is important for nonprofits to ensure that they are operating in compliance with all applicable regulations in order to receive and maintain their funding.

What types of reports do nonprofits need to have ready for an annual audit?

Nonprofits typically need three types of reports to submit to an auditor to create their annual financial statement audits: a balance sheet, an income statement, and a statement of cash flows. The balance sheet shows the nonprofit’s assets and liabilities at a specific point in time. The income statement provides a summary of the organization’s revenues and expenses over a specific period of time. The statement of cash flows shows how much cash the organization has generated or used during the same period.

What is a loan covenant audit?

A loan covenant audit is an assessment of a borrower‘s compliance with the terms of their loan agreement. This assessment is conducted by an independent auditor and usually includes an analysis of the borrower‘s financial statements, including balance sheet and cash flow statements, as well as other documentation related to the loan. The audit is intended to ensure that the borrower is in compliance with the covenants agreed upon in the loan agreement, such as repayment terms, loan balance limits, and other requirements.

What size or type of loan would require an annual financial statement audit to be submitted to a business bank?

Generally, any loan that is greater than $1 million or is a loan used for major business acquisitions or mergers may require an annual financial statement audit. Larger loans may also require more stringent requirements, such as multiple audits per year or a more thorough review of the loan documents. Additionally, some banks may require an audit of any loan they provide, regardless of size.

What is an OMB–133 Audit?

An OMB–133 audit is an audit of an organization‘s compliance with the Office of Management and Budget‘s Circular A–133. This circular is a set of guidelines for auditing non–federal entities that receive federal funding. The audit is intended to ensure that the recipient of the federal funds is using the funds appropriately and in accordance with the requirements of the Circular. The audit will review the organization‘s financial statements and other documents related to the use of the funds and may include interviews with staff and a review of the organization‘s internal controls.

What is a Yellow Book Audit?

A Yellow Book audit is an audit conducted in accordance with the Generally Accepted Government Auditing Standards (GAGAS). This type of audit is used to assess the quality of an organization‘s financial and operational processes, internal controls, and compliance with applicable laws and regulations. The Yellow Book is the official publication of GAGAS and is the source of standards used by auditors when conducting a Yellow Book audit.

What are GAGAS (Generally Accepted Government Auditing Standards)?

Generally Accepted Government Auditing Standards (GAGAS) are a set of professional standards that provide guidance for government auditors. These standards, which are also referred to as the “Yellow Book”, are issued by the Government Accountability Office (GAO). GAGAS are designed to ensure that audits of governmental activities, programs, and functions are conducted in a professional and unbiased manner. The standards provide guidance on the types of auditing procedures that should be used and how to document audit evidence. The standards also provide recommendations on how to report audit findings and the level of assurance that should be provided.

Frequently Asked Questions (FAQs)

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