As the charity pharmacy grows, conducting a financial statement review or a formal audit is desirable. In it’s infancy, members of the Board of Directors may choose to conduct a review of financial statements at the end of the year. Board members may choose to examine, a number of accounting entries to ensure the source documents (invoices, bills, etc.) have been reviewed and that the items were entered into the accounting system accurately. In addition, board members may also desire to evaluate bank statements, payroll entries, or other financial documents. At the conclusion of the review, the board members may elect to issue a statement indicating that the financial assessment was conducted and offer additional guidance as necessary.
As the organization grows and sources of funding become larger and more complex, the charity pharmacy may elect to conduct a formal financial audit by a Certified Public Accountant (CPA). Financial audits are often conducted annually and require the CPA to issue a statement addressing the accuracy of the organization’s financial statements. Some funding sources may require a financial audit as a condition of the grant or contribution. In addition, throughout the year, a CPA can provide guidance to ensure complex accounting issues are accurately posted in a manner that is consistent with industry standards. For example, a CPA may issue professional counsel when a large capital expenditure is made, to ensure the asset is recorded on the organization’s depreciation schedule, and that appropriate amount is expensed at year end.