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The Independent Audit for Nonprofits: Does it Make a Difference?

Author

Listed:
  • Scott Dell

    (Francis Marion University)

  • Meena Subedi

    (University of Wisconsin -Whitewater)

  • Maxwell K. Hsu

    (University of Wisconsin -Whitewater)

  • Ali Farazmand

    (Florida Atlantic University)

Abstract

Prior for-profit literature provides evidence that an independent audit of the financial reports is associated with a corporation’s improved investment efficiency and financial performance. In contrast, this study investigates the relationship between independent audits and financial performance in nonprofit organizations. Relying on prior studies, nonprofits that seek an independent audit are expected to have better oversight and higher financial reporting quality, and that improved oversight and reporting quality are associated with less fraud and higher quality decision makings. This study finds that that NPOs that seek independent audits enjoy better financial performance than NPOs that do not seek independent audits.

Suggested Citation

  • Scott Dell & Meena Subedi & Maxwell K. Hsu & Ali Farazmand, 2023. "The Independent Audit for Nonprofits: Does it Make a Difference?," Public Organization Review, Springer, vol. 23(4), pages 1437-1453, December.
    • Handle: RePEc:kap:porgrv:v:23:y:2023:i:4:d:10.1007_s11115-022-00662-5
    DOI: 10.1007/s11115-022-00662-5
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    References listed on IDEAS

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