Step Up to the Next Level:

A Guide for Pregnancy Centers to Improve Their Internal Operations and Prepare for an Audit

This book is a 64-page primer. It explains why a local pregnancy resource center should be concerned about all those internal control issues. The book helps centers implement the basic internal controls that should be used by all ministries. It will offer some basic background on what the audit process looks like.

The rules have changed, whether we like it or not. We need to keep up.

The level of accountability and scrutiny falling on nonprofit organizations is increasing. The rules have changed.

Pregnancy centers need to embrace this change by improve their internal structures to create more accountability. The very first step is to make sure that basic systems are in place. This provides the step up to a basic level of accountability. Once that level is reached, the organization can then step up to increasing levels of accountability. After several steps, a pregnancy center can reach the point of being able to easily go through a financial audit.

This book is written for people who are not experienced with complicated financial and accounting “stuff.” This book steers away from the specialized terminology of the financial world. It will not give all the details you need, and it will not address all the issues that exist. Many wonderful resources go into much more detail. This book aims for a nontechnical, introductory level.

Where does this book start and where does it end?

This book will be very helpful for a nonprofit organization that wants to move forward from the shoebox operation. That is where we begin. It is designed to be most helpful for the ministry to step up to the level of sound internal controls and even to getting its first audit. That is where we end.

The discussion in this book assumes your ministry is incorporated, has received a determination letter from the IRS that it is tax-exempt, and has actually started operations. This means you will not see any information in this book on how to become incorporated or how to get an official determination from the IRS regarding the tax-exempt status of your organization. There are resources available from other organizations to help develop a strategy for starting a center, getting it organized, and operating. An attorney in your community can help you incorporate. An attorney or CPA can assist your center in applying for tax-exempt status with the IRS.



Summary of the chapters and sections.

Chapter 1 – Why Step Up to the Next Level?

  • Where is this book going?
  • Why is there a need to step up to the next level?
  • Where does this book start and where does it end?

Chapter 2 – Get Up to Speed

  • Accounting
  • Internal controls
  • Board of directors
  • Everyone knows the expected rules
  • Processing of payroll
  • Personnel policies

Chapter 3 – Internal Control Basics

  • Internal control protects your staff
  • Basic internal control ideas
  • Other comments on internal control

Chapter 4 – A Few Advanced Financial Issues

Chapter 5 – The Audit Process

  • Level of services provided by a CPA
    • -Compilation
    • -Review
    • -Audit
  • The accounting profession
  • Finding a firm
  • Proposal process
  • Contract for services
  • Request list
  • Fieldwork
  • Wrapping up the audit

Letter of recommendations

Chapter 6 – For the Auditor: Background on Pregnancy Centers

Chapter 7 – For the Auditor: Planning Issues for the Audit

Appendix A – Diagnostic Checkup – A Short Version

Appendix B – Resources Available on the Internet

Appendix C – Sample Chart of Accounts