The IRS andindependent auditorsanalyzeaccounting systemsofnot-for-profitorganizations. These organizationsare expected totake extra precautionsto avoid unethical accounting practices andcostly mistakes.Auditorsanalyze organizations'internal controls and howcontributions are usedby computing the percentages of each type ofincome distribution andcomparing resultsagainst similarorganizations.Also examined are salaries, bonuses, and benefitsto ensure moneyis prudentlydispensed.

Discuss the ways a not-for-profit organization should prepare for an external audit.

Discuss whichcharitable not-for-profit organizationsarerequiredtohavean independent auditand which authority requires the audit.