Tools for Excellence
Q: One of the requirements listed is that my NAMI Affiliate needs to have an audit. How do we go about that? How often does that need to occur? Is there any flexibility on this requirement?
This question does not have a simple and straightforward answer, because there are many variables to consider when making this decision. Some of those variables are:
If you are a direct grantee of state or federal government you will almost certainly be required to have an annual audit. You should examine you grant terms to be sure you are in compliance.
Some public and/or private foundations require an audit in order to fund organizations. If you receive foundation grants, examine the grant terms for compliance obligations. If you are planning to enter into that domain, you will need to plan accordingly.
If your organization is carrying a loan or has a significant line of credit, your lender may require an annual audit.
For the purposes of affiliation through the NAMI Standards of Excellence, we would expect that you are operating within the guidelines of any of the above entities with which you are actively engaged. However, if none of the above situations apply to your organization, the following guidelines for the level of financial review NAMI requires are as follows:
If your organization has gross annual revenue of $500,000 or more, you need to have an annual audit.
If you organization has gross annual revenue of between $50,001 and $499,999, a financial review will be sufficient.
If your organization has gross annual revenue of $50,000 or less, a compilation will be sufficient.
The cost of accounting services vary widely, and just like with insurance, we recommend that you shop around for the best rate you can find. A good rule of thumb, especially in small organizations, is to stay local when choosing an accounting firm, rather than going with a big name that has less incentive to give you personalized attention. You should also ask about whether a firm offers pro bono services to small nonprofits, or if the rates can be reduced for nonprofit organizations. Another factor in the cost of these services is the area of the country in which you operate, and whether you are in an urban or rural community. An additional consideration in the cost of these services is the length of time it will take the accountants to complete the work, and that is often based on how well your books have been kept and the organization of your records. Below are some very general guidelines for what you might expect to pay – but these are not hard and fast rules and you can expect some variation depending on where you operate.
Audit services can cost between $4,000 and $10,000
A Financial Review can cost between $2,000 and $6,000
A Compilation can cost between $400 and $1,000