Can you help me understand this Accounting question?
**dont just say yes or no use detailed through answer**
I believe that audit firms should give reduced audit fees to charities because of three specific reasons. These lower audit fees are adjusted when looking at the risks of a charity such as the salvation army or feeding america. Usually these clients tend to have lower risks which means there would be less billable hours, and less work needed to complete the overall audit. Charity audits also use a lesser market rate so that they can have their audits done by audit firms. To keep donor’s from being skeptical on where a charity’s money goes, these audits need to be done so that they can be transparent to the people who are looking out for them. Giving expert public financial reports will function in getting the trust of the public so they may get continued support. Lastly, doing charity audits is a way in which auditors see that we are assisting and giving back to the world. Which would be considered in some form, as a donation back to the charity.
Other benefits that accounting firms accrue by auditing a charity are also available. Presenting various services allows firms to enhance their competitiveness, and create situations and experiences with which they may learn new practices, as well as laws and regulations. Another benefit is to grow the firm, a new client, whether it is a charity or not, is always great to have. The more clients a firm can have the more revenues that can be generated. There are many separate job opportunities that an accounting firm can deal with in a charity, which also results in larger revenues. The third benefit would be to raise awareness for the firm’s reputation. This goes back to the situation that we spoke of earlier which is giving back. People hold companies at a higher regard when they are seen giving back to the world. This will grow the firm’s reputation as a firm that you would love to be a client for or work for as well as other benefits.
Charities pose certain risk factors when it comes to their audits. Those include the changing industry environment. Complex regulations that have an effect on charities is high. Financial stability is also a risk factor as various agreements between donors and the charity result in ways of viewing the books. Also,management is a risk, as pressure increases and their abilities are compromised when targets are not met during the time allotted.