This sample audit shows what to expect from a typical audit.
The first report is the Statement of Financial Position (Balance Sheet), followed by the Statement of Activities (Profit and Loss activities for both restricted and unrestricted revenue) and the Statement of Cash Flows (reconciling accrual accounting with actual cash flows for the year).
The last report – the Statement of Functional Expenses – shows how costs are allocated across Programs, Fundraising and Administration. These three categories come from the IRS form 990 (a nonprofit’s tax return) and are the foundation of an organization’s budget. The end notes are short narratives that give additional detail on issues that impact an organization’s financial position and performance, like leasing arrangements, depreciation, restricted funding, liquidity, endowments, and investments.
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