Part III

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Question 8 asks if the nonprofit has had a compilation, review or audit. This information is informative but incomplete, and, as a result can be misleading. A nonprofit can answer that it has an audit (seemingly good news) but it might be a qualified opinion or might include going concern language (which would be bad news).

In addition, a nonprofit could have had a much more rigorous audit, called a Single Audit Act audit or A-133 audit. If so, there is much more information publicly available from the Census Bureau. I recommend that nonprofits be required to report the information that the nonprofit's auditors provide on the SF-SAC Form. For a copy of this form, go to: http://harvester.census.gov/fac/collect/2004FormAndInstruct.pdf[1]

I recommend that Question 8 be modified to provide a fourth choice: A-133 Audit and that several additional questions be added to the Form that draw directly from Form SF-SAC, particularly Part II of that form:

For nonprofits that check compilation, review, audit, or A-133 audit in Question 8

• Name of CPA firm
• Has the CPA firm changed since last year?
  • Yes
  • No

For nonprofits that check audit or A-133 audit in Question 8

• Type of audit report:
  • Unqualified opinion
  • Qualified opinion .
  • Adverse opinion
  • Disclaimer of opinion

• Is a "going concern" explanatory paragraph included in the audit report?
  • Yes
  • No

For nonprofits that check A-133 audit in Question 8

• Is a reportable condition disclosed?
  • Yes
  • No

• Is any reportable condition reported as a material weakness?
  • Yes
  • No

• Is a material noncompliance disclosed?
  • Yes
  • No

Elizabeth Keating CPA, 23 June 2007