Nonprofit Organizations in Growth: When Audit Becomes a Credibility Lever, not just an Obligation

Interview with Stéphanie Chatelard, CPA Auditor and Executive Director, Assurance, and Lino Delarosbil, CPA Auditor and Partner at Forvis Mazars

In the nonprofit (NPO) sector, audit is too often perceived as a formality imposed by funders. Yet when it is tailored to the realities of the sector, audit becomes a true strategic lever, one that strengthens governance, secures funding, and supports sustainable growth.

This is the perspective shared by Stéphanie Chatelard and Lino Delarosbil, two CPA auditors who have been supporting organizations of all sizes for many years, including cultural and community organizations, para-governmental bodies, professional orders, foundations, and student associations.

Audit: A valued tool, not just a requirement

Unlike private companies, where audit may be viewed as a necessary burden, nonprofit organizations generally adopt a more collaborative approach.

According to Stéphanie, “In nonprofits, clients appreciate receiving recommendations. You really feel that you are helping them. It’s very different from some Inc. companies, where a recommendation can be perceived as a challenge to the work that has been done.”

Lino shares this view. “Audit brings transparency and credibility, and that’s exactly what funders are looking for,” he explains.

Governance: Practices that are sometimes more stringent than in the private sector

Contrary to popular belief, nonprofits are not simple organizations.

“They manage public funds, donations, and grants. Their responsibility toward donors and funders is immense,” says Stéphanie.

Nonprofits must demonstrate that they respect their mission, use entrusted funds appropriately, and apply robust internal control processes.

Lino emphasizes the importance of a strong board of directors. “A diversified board with expertise in finance, law, and governance is essential to ensure stability. Board members must also be independent to avoid any conflicts of interest.”

Common pitfalls: Where audit creates real value

Several recurring issues arise in audit engagements:

• incomplete or disorganized documentation.
• misinterpretation of grant agreements.
• inappropriate use of restricted funds. As Stéphanie points out, “Sometimes, a proper understanding of restricted funds can literally prevent a funding cut.”
• insufficient preparation prior to the audit, leading to adjustments and delays.

Sector challenges: Uncertain funding and operational sustainability

Many nonprofits must contend with non-recurring, frozen, or insufficient funding. This challenge is particularly acute in the cultural, social, and community sectors.

Lino observes that when funding stagnates while costs continue to rise, organizations are often forced to scale back activities or cancel projects. As a result, nonprofits must be creative in increasing their own-source revenues. This may involve launching annual fundraising campaigns, leveraging social media, highlighting tax incentives available to donors, or actively seeking new partnerships and sponsorships.

Understanding financial models specific to nonprofits

A nonprofit audit cannot be a replica of a small or medium-sized enterprise audit.

It must take into account:

• nonprofit accounting standards
• the nature of donations
• funding agreements
• projects
• the organization’s sector of activity

As Lino notes, “Understanding an organization’s funding is essential. The financial model of a theatre, for example, has nothing in common with that of a community organization or a foundation.”

Real impact: When expertise changes an organization’s trajectory

The two auditors have supported nonprofits at critical moments, including:

• restructuring governance within a student organization
• guiding a financially distressed organization toward restructuring specialists
• clarifying contribution agreements and conditions for the use of funds, helping to avoid the loss of funding

How to maximize the value of an audit

To turn audit into a true strategic advantage, Stéphanie and Lino recommend:

• establishing transparent communication processes between management, governance, and auditors
• clearly defining the roles and responsibilities of all parties involved
• understanding existing internal controls and strengthening them as needed

As Stéphanie and Lino both emphasize, “Avoiding grey areas is the foundation of good governance.”

Conclusion

Audit is not merely a compliance exercise. It is a strategic investment that enhances credibility, structures growth, and supports the mission of nonprofit organizations. In the hands of professionals who truly understand the nuances of the sector, audit becomes a powerful and transformative tool.