The Bond, which protects all NSO affiliates, requires a yearly audit be done of each affiliate’s accounts. This audit is the responsibility of the individual affiliates. These procedures should be used as a template to complete your affiliate’s audit
The internal audit committee shall meet one day prior to each scheduled September and March Executive Committee meeting for the purpose of conducting an examination of the organization’s financial records. At a minimum, the examination should include the following items:
Bank Reconciliations #
- Review bank statements with reconciliation reports and compare all balances to what is recorded in QuickBooks.
Receipts #
- Review bank statements for deposits and trace the deposits to the corresponding postings in QuickBooks.
- Review the billing invoices to the NSO membership database to ensure proper billing is occurring.
- Review all non-dues receipts, and trace supporting documentation.
Disbursements
- Randomly select at least one (1) month since the last Internal Audit Committee meeting and review all cancelled checks that cleared the bank for that time period.
- The review shall include:
- An examination of all cancelled checks for consistency of payee and check endorsement.
- A comparison of the amount and payee on each check against what was recorded in the disbursements journal in QuickBooks.
- A review of supporting documentation, including:
- Signed and approved expense vouchers
- Proof of Mileage
- Verification of purpose and legitimacy of expenses
- Verification that authorizations for ‘out of policy’ expenditures are documented with appropriate authorization
- Verification that the expense policies of the organization are being followed
- Ensure all cancelled checks for the review time period have been provided to the audit committee for examination.
Fixed Asset Purchases #
- Review inventory of fixed assets and make sure all new purchases, according to the organization’s policy, are added to the inventory list as applicable.
Budget #
- Compare budget to actual expenditures and make sure there are adequate explanations for any substantial variations.
Monitor Compliance with the Credit Card Policy and Procedures #
- Randomly select at least one (1) month of credit card reconciliations since the last Internal Audit Committee meeting for all NSO credit card holders.
- The examination shall include a thorough review of the credit card statements to:
- Determine consistency of expenses
- Review the supporting documentation for the month(s) being reviewed, including:
- Signed and approved credit card reconciliations
- Verify the purpose and legitimacy of expenses
- Verification that authorizations for ‘out of policy’ expenditures documented with appropriate authorization
- Verification that the expense policies of the organization are being followed
Internal Controls #
- Review management letters from an outside accounting firm to identify internal control procedure recommendations.
- Review the organization’s internal control procedures and, if appropriate, recommend changes to the Executive Committee.
IRS and DOL Returns #
- Verify all IRS Form 990, 1099s and 1096s have been filed.
- Verify LM report have been filed.
- Verify all state reports have been filed.
Auditor #
- At least once per year, the Internal Audit Committee shall informally meet with the NSO Auditor to discuss the findings of the committee.
Upon the completion of each Internal Audit Committee meeting, a written report will be provided to the Executive Committee. The report must include all instances of financial irregularities and/or violations of NSO policy.