Forming audit committees is becoming more common in the nonprofit sector, offering an unbiased outlet to monitor an organization’s finances. Here are three things to consider when building an audit committee:
• Responsibilities: Including liaising with financial teams or hiring outside auditors.
• Qualifications: Audit committee members typically have backgrounds in finance or regulatory compliance.
• Independence: The committee should be as neutral as possible. Organization executives should not be part of this committee.
Though many nonprofit organizations may never experience financial mismanagement, it is impossible to avoid all issues. Audit committees are the best way to protect organizations against improper financial reporting.