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Don't let a single audit take you by surprise

One nonprofit's tale of preparation

December 3, 2021  |  Corey Butler

Don't let a single audit take you by surprise

For Interfaith Action of Greater Saint Paul, a nonprofit that primarily works toward housing families who are facing homelessness in Ramsey County and operating a food shelf for Indigenous people in the Twin Cities, a single audit was not something it’s dealt with before.

Fortunately, the organization’s director of finance and administration, Peter Olsen, spent 12 years in public accounting and has dealt in the area before. Therefore, when various federal funds funneled to the nonprofit in the past fiscal year as a result of COVID-related legislation, the organization, for the first time, hit the $750,000 threshold to trigger a single audit.

Great for them — but not every nonprofit has a Peter Olsen.

Knowing what to look for

Anticipation and understanding were key, Olsen said, because receiving the funds wasn’t just about tracking the dollars, but also preparing for any other reporting and expectations that came with them.

“Government contracts require a lot of different regulations and requirements,” he said. “It allowed us to make sure the documentation of our processes and procedures were completed and that there weren’t any surprises.”

Olsen’s team didn’t realize it hit the threshold until after the fiscal year had finished and they were finalizing billing to the prior fiscal year. One grant pushed them over.

In a typical year, Olsen said the nonprofit typically receives about $60,000 in federal funds, so hitting $750,000 during the past fiscal year was unlikely, but we’re living in unlikely times.
“It wasn’t until COVID with the CARES Act and other supplemental funding that we started to receive more federal funding,” Olsen said.

What complicates this situation even more, both for the Interfaith Action of Greater Saint Paul and all nonprofits, is federal funds don’t have to be given directly from the federal government to a benefiting nonprofit. The money can funnel through other groups, be it other government entities or nonprofits. So, it’s paramount to track back to where the money originated so you know how to document, prepare and meet the conditions of the agreements.

In Olsen’s case, his nonprofit received almost all of its grant money last year from other organizations and not directly from the federal government, including $200,000 that was received from the American Indian Cancer Society to help operate the food shelf.

“They all came through pass-through entities,” he said.

Keeping the dialogue going

To Olsen, working in concert with his auditors from Mahoney CPAs and Advisors was vital to anticipating the potential to exceed the $750,000 threshold, and to have all the paperwork and processes in place for that moment. Without that long view, he said it would have been quite the challenge. Not only a challenge for his finance department, but more so for the programming department in making sure those requirements that came with the money would be met for the federal audit.

“It was important to let the auditors know right away of the funding,” Olsen said. “They amended the engagement letter and then they knew who to call in to help with the single audit. Everything went smoother because of those conversations.”


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Topics: Clients, Economy, Accounting & Auditing, Government, Not-for-Profit, Taxation-Business

Corey Butler

Corey Butler is the MNCPA communications manager, working to enhance members’ professional reputations through content, media relations and public affairs. Corey keeps busy outside of the MNCPA spending time with his wife and children, serving on his local school board, volunteering in his community and catching up on long-lost hobbies. Corey enjoys the works of John Steinbeck and J.K. Rowling, and Paul Bunyan, Robin Hood and Santa Claus lore. You may reach him at 952-885-5530 or cbutler@mncpa.org.

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