IRS Form 990 Return of Organization Exempt From Income Tax is filed annually with the Internal Revenue Service by organizations exempt from Federal income taxes; however some nonprofit organizations are exempt from filing. The 990 Form provides information on the filing of the organization’s mission, programs, and finances. The preparer of the form however, does not attest to the accuracy and fairness of the information provided, which is the function of an auditor.
While a firm’s accountants prepare financial reports, auditors serve as intermediaries who will lend some credibility to the financial information. This process is called attestation, whereby an auditor will attest, or report, that the information is reliable by expressing an opinion that the organization’s financial position, results from operations, and changes in financial position, is in accordance with generally accepted accounting principles.
The American Institute of Certified Public Accountants has stated the main objective of a financial audit as follows: “The objective of the ordinary examination of financial statements by the independent auditor is the expression of an opinion on the fairness with which they present, in all material respects, financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. The auditor’s report is the medium through which he expresses his opinion or, if circumstances require, disclaims an opinion. In either case, he states whether his examination has been made in accordance with generally accepted auditing standards.”
Therefore, while the documentation of the financial position is similar, the auditor will use procedures such as recalculation, physical observation, confirmation, verbal inquiry, document examination, scanning and analytical review to obtain evidence in order to provide an opinion as to the accuracy and fairness of the organization’s financial position.
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