ACC Audits becoming increasingly important

ACC Audits becoming increasingly important - and...

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From the accounting point of view, there are several differences between profit and not for profit organizations. The first is regarding the ownership of business. For a profit oriented business, regular accounting as for a sole trader, partnership, or limited company may be done but for a not for profit organiztion, either trust accounting or fund accounting is to be done because not for profit organizations are either trusts or specific funds established for the purpose. The second difference is the objective of pursuing profits. Profit oriented organizations have regular sales, purchases and expense accounts where as not for profit have income/expenditure accounts or grants/expenditure accounts. The third difference is in the statements prepared. For profit organizations prepare income statement and balance sheets while not for profit organizations prepare income
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Unformatted text preview: and expenditure account plus a statement of affairs. Audits are becoming important in the non profit sector because: • Some people have fraudulently registered their concerns as not for profit, where as in fact they are carrying profit oriented activities under its cover, either to evade tax or to gain undue advantages. The accounts must therefore be audited in order to disclose such fraudulent activity and ensure an organization remains true to its cause. • Non-profit organizations also emphasize on audits so that they can check upon the economy, efficiency and effectiveness of their operations. • The non-profit organizations want to ensure that their financial statements present a true and fair view of their affairs, comply with relevant laws of the land and do not contain material misstatements....
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