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Objective of Tool: This tool facilitates the analysis of a nonprofit organization’s audited agency-level financials. It is
designed to automatically identify areas of strength as well as areas of concern that could impact
the organization’s financial stability.
Audience for Tool: This tool can be used by both funders of nonprofit organizations and nonprofit practitioners.
definitions of
the financial
Go to
Review the
ratios and
1 Definitions
trends
page...
yellow cells from Agency's
Review the
and trends
3 Go to Output
Review the Agency's financial page...
ratios and trends
Go to
4 Input comments from the Comments on
Executive Director Output page...
into the yellow cells if applicable
© REDF 2007, Please contact REDF at info@redf.org to obtain permission before copying,
distributing or modifying this tool. This tool was created by Beth Yeap and Emily Bolton with
input from Armamino McKenna LLP
Audit Insight Tool: Definitions & Explanations
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The purpose of this page is to explain the metrics, ratios, and trends that can be used to assess an organization's
financial viability. Instruc-
Defin-itionsInput PageOutput Page
In the columns below you will see definitions and descriptions of the terms, as well as the ranges that indicate whether a tions
metric is "good", "bad" or to "approach with caution".
For example, if the percentage change in Total Assets from 2004 to 2005 is greater than zero the organization is in good
shape. If the year over year change is smaller than -20%, there is a problem that should be immediately discussed
within the organization.
You can return to this page at any point during the process to review the definitions.
( x = metric )
Assets What the organization owns A significant decrease in assets, especially when
Balance Sheet
there is a negative cash flow or operating deficit, x>0 -20 < x < 0 < -20%
could signal a problem.
Liabilities What the organization owes A significant increase in liabilities could signal a
problem, unless there are liabilities associated x<0 x>0
with the organization's mission (e.g. housing).
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Audit Insight Tool: Definitions & Explanations
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Ratios Definition Why is this important? Green Yellow Red
"Good" "Caution" "Alert!"
specific ratios can very depending on the < 0.5 0.5 < x < 1 >1
Assets (UNA) Net Assets
organization's industry.
=(Fundraising Expenses + If these expenses are too high it indicates that the
Overhead Expenses Administrative Expenses) / organization invests too much in overhead and too < 30% > 30%
Total Expenses little in mission related activity.
Income Statement
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Audit Insight Tool: Input Sheet
For this page you will need the organization's Audited Financial Statements including:
Management Letter from Auditors
Statements of Financial Position
Statements of Activities
Statements of Cash Flows
Because exact line items can differ from organization to organization, do your best to match
category to category and enter the items as they are listed.
If there is more than one line item under each category, enter the sum in it's respective box below.
More detailed notes can be found 'hidden' throughout the page. Allow your mouse's cursor to hover
over the red triangles to bring the notes into view.
See cell B10 "Auditor's Opinion Unqualified?" for an example.
Net Assets
Unrestricted
Temporarily restricted
Permanently restricted
Liabilities
Total Current Liabilities
Long-term Debt (Long-term liabilities)
Total Liabilities
Total Liabilities (Double Check) 0 0
"Statements of Activities"
Revenue
Grants - In-kind donations
Grants - Contributions
Grants - Individuals
Grants - Foundations
Total Grants 0 0
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Audit Insight Tool: Input Sheet
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Audit Insight Tool: Input Sheet
Program Revenue - revenue from businesses 1
Program Revenue - revenue from businesses 2
Total Program Revenue 0 0
Other Revenue 1
Other Revenue 2
Other Revenue 3
Other Revenue 4
Total Other Revenue 0 0
Total Revenue
Total Revenue (Double check) 0 0
Expenses
Program Expenses
Fundraising expenses
Total Expenses
Total Expenses (Double check) 0 0
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Instruc-
Defin-itionsInput PageOutput Page
tions
Fiscal Year
Yes
No
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0
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Audit Insight Tool: Output Sheet
ACTUALS in $ Trends GO TO:
Cash Balance 0 0 0
Liabilities
Current Liabilities 0 0 0
Long-Term Debt 0 0 0
TOTAL LIABILITIES 0 0 0
Revenue
Grants (individ & foundation) 0 0 0
Government 0 0 0
Program Revenue 0 0 0
Income Statement
Other Revenue 0 0 0
TOTAL REVENUE 0 0 0
Expenses
Program Expenses 0 0 0
MG/Admin Expenses 0 0 0
Fundraising Expenses 0 0 0
TOTAL EXPENSES 0 0 0
Net Income 0 0 0
Flows
Cash
Management Letter 0 0 0
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Audit Insight Tool: Output Sheet
Auditor's Opinion Unqualified? GO TO:
Page 11 of 12 03/26/2011
Audit Insight Tool: Output Sheet
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Ratios 0 0 0 Notes & Outstanding Questions Agency Response
Current Ratio
Balance Sheet
Debt to UNA
Debt Coverage
% Unrestricted Assets
Fundraising Exp /
Income Statement
Listed Contributions
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