Are external audits required for the Sub Deb Club, and who typically conducts them?

• A. External audits are never required.
• B. Internal staff conduct all audits on a quarterly basis.
• C. Audits are always conducted by the organization’s own board.
• D. External audit may be required by bylaws or funding bodies; a certified public accountant or audit firm conducts the audit and reports.

Answer: (D)

External audits exist to provide independent verification of an organization’s financial statements, giving stakeholders confidence that the numbers are accurate and compliant with applicable standards. For many nonprofits, including clubs like Sub Deb, external audits aren’t automatic but may be required by bylaws or by funding bodies that want objective assurance before they provide support. Because independence is essential, the audit is performed by a certified public accountant or a dedicated audit firm that has no conflicts of interest with the organization and can issue an impartial report. They examine financial records, internal controls, and compliance with relevant accounting rules, then present findings in an audit report.

That’s why the best answer notes that external audits may be required by governing documents or funders and are conducted by a CPA or audit firm. The other statements misrepresent what an external audit is: internal staff carrying out audits wouldn’t be external, and while boards can oversee financial reporting, they don’t provide the external audit itself.