How to perform a nonprofit self audit

A self-audit is an internal review by the board or finance committee. It is useful discipline and it is not an audit: it carries no independent opinion and does not satisfy a federal single audit requirement (2 CFR 200.501) or a state audit requirement.

Last verified: 2026-09-20 · Every figure links its source.

How to perform a small nonprofit self audit

Pick a period and freeze it, exactly as an auditor would.
Reconcile every bank, investment and credit card account and file the reconciliations.
Sample twenty transactions and check approval, documentation and coding.
Trace three grants end to end: agreement, budget, spending, reporting.
Check payroll allocations against the documented basis.
Confirm donor restrictions are tracked and releases are recorded.
List what you could not verify, and what you will change.

Write the result down and take it to the board. The point is not to imitate an audit opinion; it is to find what an auditor would find, earlier and cheaper.

Source: 2 CFR 200.514 · GAO Government Auditing Standards · Last verified: 2026-09-20

Who should do it?

Someone who did not do the bookkeeping. In a small organization that is usually the treasurer, a finance committee member or an audit committee where one exists — the California requirement is the clearest statutory example (Cal. Gov. Code § 12586). If nobody independent exists internally, a CPA can perform agreed-upon procedures on the areas you choose, which is cheaper than an audit and gives you findings rather than an opinion.

Source: Cal. Gov. Code § 12586 · 2 CFR 200.425 · Last verified: 2026-09-20

When is a self-review not enough?

Federal awards expended reached the threshold — a single audit is required (2 CFR 200.501).
State charity law requires an audit or a review at your revenue level.
A funder or lender requires audited statements.
You are merging, dissolving or transferring programs and need a defensible record.

Source: 2 CFR 200.501 · Cal. Gov. Code § 12586 · Last verified: 2026-09-20

Should a nonprofit audit before dissolution?

There is no federal audit rule triggered by dissolution, but the practical case is strong: restricted funds have to be identified and transferred correctly, final federal reports have to be filed, and the federal record retention clock runs from the final financial report (2 CFR 200.334). State law governs the dissolution itself and may require final statements. Where federal awards were expended in the final short period, the single audit test still applies to that period.

Source: 2 CFR 200.334 · 2 CFR 200.501 · Last verified: 2026-09-20

What should a nonprofit do after an audit?

Close the loop: present the results and the management letter to the board, write the corrective action plan for each finding with an owner and a date (2 CFR 200.511(c)), fix the control rather than the transaction, and check the fix yourself before the next fieldwork. Repeat findings are both avoidable and expensive — see repeat findings.

Source: 2 CFR 200.511 · Last verified: 2026-09-20

Questions and answers

How to perform a nonprofit self audit?

Freeze a period, reconcile every account, sample transactions for approval and coding, trace grants end to end, check payroll allocations and donor restrictions, then write down what you could not verify and what you will change.

Should nonprofits conduct an audit before dissolution?

No federal rule requires it, but restricted funds, final federal reports and the record retention clock all argue for a clean final record. State law governs the dissolution itself.

What to include in an informal audit of a small nonprofit?

Reconciliations, a transaction sample, three grants traced end to end, payroll allocation support, donor restriction tracking, and a written list of gaps.

What should a nonprofit do after an audit?

Present the results to the board, write a corrective action plan with owners and dates, fix the underlying control, and verify the fix before the next audit.

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This is public-record information, not accounting or legal advice.