Checklist For Audit of Charities

An audit or review may be mandated by its constitution, trust deed or other rules for charities to meet legal obligations and fulfill legal stipulations. This checklist can help ensure compliance.

Check that cheques are signed by more than one individual, as well as ensure life membership subscriptions and donations are properly recorded and reported on.

Financial Statements
Financial statements provide a snapshot of a business’s overall financial circumstances, comprising of balance sheet, income statement and statement of cash flows. Together these statements offer a more complete view of a company’s finances than would be revealed individually.

Charitable trusts offer donors and charities alike an efficient means of making donations while taking advantage of tax deductions and direct donation possibilities. Trusts can be established both during life or as part of estate plans, offering many advantages to both donors and charities alike – such as legal and financial security, asset protection, tax deductions and the opportunity to direct donations directly. Furthermore, charitable trusts adhere to stringent legal guidelines so that your assets are used according to your wishes.

Donations
Your charity may accept cash donations or payments from individuals or organisations for specific purposes. In order to comply with rules contained within its governing document regarding this, and any alternative banking methods (like money remittance services) being utilized by it. Please refer to Charities: Holding, Moving and Receiving Funds Safely for more details.

Donors who donate assets to charitable trusts such as a lead trust or remainder trust often have tax deductions available; it’s wise to seek professional advice regarding your specific situation prior to making such gifts.

Income from Investments
No matter your financial legacy goals or impact goals, charitable trusts provide a smart solution. Not only can they support specific causes while creating income opportunities; but their tax advantages make them especially suitable for heirs facing higher than average income tax rates.

Auditing a charitable trust requires carefully scrutinizing receipts and expenses. As part of this process, auditors must vouch for all receipts received as well as reviewing investments schedule. Furthermore, rates and calculations of interest must also be verified as well as examination of tenancy agreements. In addition to that, receipts/payments related to special events organized by the trust should also be verified as well as examination documents related to securities donated from individuals or companies.

Rent Received
If the income of a charitable trust exceeds tax-exempt levels, an audit must be performed. This process involves engaging the services of a certified chartered accountant to ensure accurate income computation, enhance financial transparency and promote regulatory adherence for charitable initiatives.

An auditor must review the constitution and governing laws of a charitable institution as well as internal controls pertaining to donations and subscriptions collected. He or she may also evaluate whether donations and subscriptions have been properly accounting for.

He must check for receipts, examine cashbooks and counterfoils as well as accounts of unused receipt books, verify donations to beneficiaries list and verify whether or not any monies or property from charitable trust were diverted elsewhere during year.

Special Events
Charity trustees should regularly monitor the financial position of their charity to ensure it remains solvent, including checking for risk of insolvency by looking at a variety of factors.

Trustee should ensure all payments are properly authorized and recorded, including signing all cheques by two individuals or by at least two committee members. Furthermore, they should verify whether their charity has policies in place to restrict pre-loaded cash cards that pose a higher risk due to lacking an electronic transaction record.

An auditor must review a list of members, counterfoils of receipts and donation register for comparison to bank statement for the period in question. He should also confirm that all movable assets are properly and regularly valued.