Result Driven Impact

Audit Assurance

Background

Community Support Solutions is a nonprofit organization dedicated to providing family and social support services. Governed by a board of directors, the organization generates approximately $2.8 million annually and employs 28 dedicated individuals. Recognizing the potential for unexpected financial burdens stemming from governmental audits, Community Support Solutions proactively implemented an 831(b) Plan to mitigate these financial risks and maintain operational stability

  • INDUSTRY: Non-Profit Sector
  • SPECIFIC: Family and Social Support
  • ANNUAL GROSS REVENUE: Approx. $2.8 Million
  • EMPLOYEEES: 28
  • OWNER STRUCTURE: Non-Profit Organization
Audit Assurance

Risk Description

Community Support Solutions faced considerable financial exposure associated with unexpected and comprehensive audits initiated by state regulatory authorities. Traditional insurance policies generally do not cover administrative costs and operational disruptions caused by regulatory audits, leaving nonprofit organizations vulnerable to unforeseen expenses and financial strain.

Incident/Event

The organization encountered an unanticipated state regulatory audit, significantly impacting its regular operations. The audit required extensive administrative effort, diverting considerable staff time and organizational resources. Initial financial impact assessments, primarily based on administrative personnel hours, were estimated at approximately $10,750. After a thorough review, the final financial loss due to the audit was determined to be approximately $7,000.

Resolution

Community Support Solutions quickly filed a claim through the Audit Assurance policy included in their 831(b) Plan, specifically tailored to cover financial impacts resulting from regulatory audits. The direct writer efficiently verified and processed the claim, utilizing meticulously documented time records, incurred expenses, and other audit-related costs.

The Audit Assurance policy fully reimbursed the organization for all documented expenses, totaling approximately $7,000. This immediate financial relief allowed the organization to preserve essential financial resources, ensuring uninterrupted service commitments and ongoing operational stability. Additionally, the experience provided valuable insights, enhancing the organization’s preparedness and resilience against future audits and regulatory challenges.

Key Takeaways

By strategically utilizing their 831(b) Plan, Community Support Solutions effectively managed and mitigated financial disruptions associated with a regulatory audit. This incident underscores the importance of specialized audit assurance coverage to safeguard nonprofit organizations against unexpected regulatory expenses that traditional insurance policies typically exclude.

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