In the past, most nonprofit audits were conducted on-site. The audit team traveled from their office to yours, and spent several days reviewing paper files, interviewing employees, and observing your team in action. But as the traditional office environment contracted and virtual tools went mainstream, remote audits have become a more popular option.
Today, one of the biggest decisions you might face is whether to conduct your audit remotely or have auditors work on-site. Both options can work well. The right choice depends on your financial systems, work culture, and capacity. Before you choose a nonprofit audit firm, carefully consider the pros and cons of remote vs. on-site audits.
The Case for Remote Audits
Remote audits are often cheaper, more efficient, and great for organizations that already work remotely or are spread out across multiple office locations. However, remote audits also come with a learning curve and can make communication more difficult.
Pros of Remote Audits
Greater flexibility
Remote audits allow staff and auditors to coordinate schedules more easily. Documents can be uploaded to a secure portal, meetings can be scheduled around busy program calendars, and there’s often less disruption to day-to-day operations.
Lower costs
Remote audits reduce travel and lodging expenses for the audit team. This often lowers the overall cost of the audit or at least eliminates any incidental costs tied to hosting auditors on-site.
Efficient document sharing
If your nonprofit already uses cloud-based accounting software and digital document storage, a remote audit is the most efficient option. Auditors can access general ledgers, grant agreements, payroll reports, and bank statements without waiting for physical files.
Easier coordination for multi-location organizations
Many cost-conscious nonprofits have reduced or eliminated physical office space in recent years, while other organizations collaborate virtually from different geographic locations. If your team is already used to working remotely, a virtual audit will fit right in with your current processes.
Cons of Remote Audits
Heavier preparation burden
Remote audits require strong internal organization. Your team must scan, upload, label, and track documents carefully. If your files are largely paper-based or scattered across departments, the prep work can be time-consuming.
Less face-to-face interaction
Some finance teams value the informal conversations and offhand questions that occur during on-site audits. Remote meetings can feel more transactional and less collaborative.
Technology concerns
Technical difficulties, internet issues, and unfamiliar platforms can slow the audit process down. If your staff is not comfortable with digital systems, you may increase the chance of delays or missed deadlines.
Harder to observe processes
Auditors sometimes gain insight by physically observing how cash is handled, how mail is opened, or how approvals flow through an office. While video walkthroughs help, they are not always equivalent.
The Case for On-Site (In-Person) Audits
Traditional on-site audits make the most sense for organizations with complex operations, paper-based systems, or physical inventory. But hosting auditors on-site requires the physical space to do so, and may come with operational disruptions or increased expenses.
Pros of On-Site Audits
Stronger relationship building
Having auditors physically present can foster trust. You can ask quick, spur-of-the-moment questions that may lead to unexpected insights. Executive leadership may also find in-person discussions more productive when reviewing internal control recommendations or management letters.
Easier access to paper records
Converting paper documentation to a digital format can be very time-consuming. If your nonprofit still relies heavily on paper files, an on-site audit may be the best choice. The auditors can simply view the physical files at your office.
Real-time collaboration
Issues can often be resolved more quickly when auditors and staff sit down together in the same room. If a document is missing, someone can walk to a filing cabinet rather than sending emails back and forth.
Better process observation
In-person audits allow auditors to observe procedures directly. This can strengthen internal control testing and provide more meaningful feedback.
Cons of On-Site Audits
Operational disruptions
No matter how friendly your auditors are, having a team of strangers in your office can feel uncomfortable – like working in a fishbowl. Their requests can also interrupt daily operations and your staff may feel they are constantly “on call.”
Potentially higher costs
Travel time and expenses can increase audit fees, especially for organizations in rural areas. If you aren’t located near a nonprofit audit firm, you may be forced to choose a local firm with limited nonprofit experience.
Space requirements
For the auditors to work on-site, you must provide adequate workspace, such as a conference room or spare office. You will also need to provide access to records, which may be inconvenient if they are stored in different locations.
Scheduling constraints
Auditors have very limited flexibility with on-site fieldwork. If they are unable to complete their work within the scheduled window of time, it can take a long time to reschedule another on-site visit. If any of your key employees are sick, on leave, or tied up with major during fieldwork, it can lead to significant delays with the audit.
Key Questions to Help Decide
To determine the best option for your organization, consider the following:
Are most of our financial records digital and well-organized?
Does our team have the technical skill and willingness to use unfamiliar, cloud-based audit tools?
How comfortable are our staff and board with virtual meetings and video calls?
Are we seeking a closer relationship with our auditors?
Do we have any processes that might benefit from in-person observation?
Is cost a primary concern this year?
If your nonprofit is comfortable with virtual tools and has limited office space, a remote audit is usually the most efficient and cost-effective choice. But if your organization has a strong in-person work culture or paper-heavy processes, an on-site audit can prevent technological headaches while providing added value.
Altruic Advisors is one of the few CPA firms in the United States that specializes in nonprofit audits. We provide remote audits to organizations nationwide.
Altruic Advisors also provide on-site nonprofit audits near each of our three main office locations:
Plymouth, Michigan
Service area includes Ann Arbor, Detroit, Lansing, KalamazooCentennial, Colorado
Service area includes Denver, Colorado Springs, Boulder, Longmont, Fort CollinsBloomington, Minnesota
Service area includes Minneapolis, Saint Paul, Duluth, Mankato, Rochester
If your organization is located outside of these services areas but would prefer an on-site audit, please contact us to discuss your needs.
