“There is just as much horse sense as ever, but the
horses have most of it.” Anonymous
You are probably wondering what “Horse Sense” has to do with a Chartered
Accountant whose practice is exclusively dedicated to providing audit and
accounting services for non-profit organizations.
Well, “horse sense” is defined in various dictionaries as: common sense;
wisdom; levelheadedness; practical knowledge and good judgement about
ordinary life. Those sound like pretty good attributes to look for in any
person or organization … and it’s what I try to bring to my professional
practice and client relationships.
The term “horse sense” dates back to the American West in the mid-1800s,
where horses were valued partners in farming, hunting and travelling.
That’s recent history for these animal survivors. In their fifty-five million
years on earth, “horse sense” has seen them through ice ages, volcanic
periods, meteor strikes and dinosaurs.
As you’ve no doubt guessed by now, I’m a horse person. I thirst for
knowledge about the physical and emotional health of my noble steed.
Every day I look for ways to communicate more positively and effectively
with a 1,300 pound animal. To work, that communication needs to be
positive, direct, simple and above all honest and sincere.
Those same characteristics are the keys to strong, constructive
professional relationships. I see providing and sharing audit and accounting
knowledge in a common-sense fashion as my way of supporting the non-
profit community … those who are making a difference in our world today.
With “Horse Sense” I hope to provide the non-profit community with valuable
information and the opportunity for two-way communication.
My professional mission is to provide the Executive Directors, Boards of
Directors and Audit Committees of non-profit organizations with “valued
real-world knowledge”. This includes the practical basics of emerging
trends in accounting, auditing, assurance services and governance for non-
Fiscal requirements and standards for non-profit organizations are
constantly changing and evolving. I pass on what I learn through reading,
courses, seminars, conferences and networking with other industry
professionals in a boiled down, plain English form.
For example, did you know that audit planning has changed significantly
since the new Canadian Auditing Standards (CAS) became effective for
fiscal years ending on or after December 14, 2010? One of the most
important changes for your NPO is that communication between the
auditor, Management, Audit Committee, and Board of Directors is now
The CAS states that “an auditor “shall” communicate, with those charged with
governance (Board of Directors), an overview of the planned scope and timing of
the audit.” While it is sufficient to communicate this overall audit strategy
in writing, I believe a face-to-face meeting with the Board of Directors
provides a smoother and happier audit trail. Direct, understandable one-
to-one communication is the foundation of a strong relationship, whether
between a horse and rider or an organization and its auditor.
The overall audit strategy sets the scope, timing and direction of the audit.
Remember, planning is not a discrete phase of an audit. It is a continual
process that begins after completion of the previous audit and continues
until the completion of the current audit.
The audit strategy provides an opportunity to learn about the “scope” of
your organization’s audit. Scope includes the determination of the overall materiality of the audit, the determination of risks and the related audit
procedures to be performed by the auditor. (Watch for more information on
materiality in an upcoming “Horse Sense” blog.)
Timely, two-way communication between your organization and the auditor
is a requirement throughout the new Canadian Auditing Standards. Audit
planning, audit findings and internal control deficiencies must be presented
to management and the board; at the end of an audit, the auditor must
evaluate the adequacy of two-way communication throughout the process.
While the CAS allows presentation of this information in writing, I believe
these critical factors should always be discussed one-to-one on a timely
basis if communication is to be truly meaningful.
Remember, an audit is equally about the people and the numbers. Your
members and your banker want to feel confident that the statements are
fairly presented. Your Board of Directors and management are looking for
an interpretation of financial performance, ideas on how to improve internal
controls and advice on any other significant matters.
Be sure to consult your auditor throughout the year regarding any changes
to your industry, organization, business processes, accounting and auditing
standards and governance. This communication and sharing of knowledge
is the cornerstone of client service … and the reason behind my blog.
The best way to learn is to keep your stable door open and accessible so
horse sense can walk into your NPO.