As a not for profit organisation, your credibility rests on your reputation for integrity. Transparency and rigour in all your financial dealings is crucial to maintaining your good standing in the community and amongst donors. Good governance can be one of your most productive assets.
That’s why it’s a good idea to have a rotation of auditors every five to seven years.
The Companies Act 2013 specifies that publicly listed companies and certain categories of private companies must rotate their auditors after a period of ten consecutive years – an indication of the importance the legislature places on the concept of rotation.
The thinking behind this is that after a period of years performing audits for any company or organisation, it’s possible that the auditor will begin to find the task routine. Certain aspects of the audit may seem familiar, and therefore appear to merit less attention. Regardless of the professionalism and commitment of the auditor, changes can be missed, and mistakes can be made.
Rotating your auditor after a period is not a reflection on them, but a sign of your commitment to rigour and transparency. A new auditor can bring a fresh perspective to the task, and strengthen its independent nature.
Consider the relationship you have with your current auditor, and the length of time that auditor has been completing the same task. Would your organisation benefit from a brand new set of eyes and a truly objective point of view? Could your current auditor’s independence and objectivity be compromised by the long-standing relationship? Is your current auditor adding value to the organisation through the audit process?
If you would like to discuss your organisation’s auditing needs, or have any questions on the benefits of audit rotation please call me on 9335 5211 or email daniel@faj.com.au.
Related blogs:
NFP annual reporting requirements
Author: Daniel Papaphotis
Email: Daniel@faj.com.au
