Important Questions to Ask on Presentation of AFS

1. How long ago was the last audit conducted?
2. What does the Auditor’s Opinion say – is it qualified or unqualified?

Balance Sheet

3. Does the organisation have enough ready cash (see ‘Cash at Bank’ listed under Current Assets) to pay off its immediate debts (see Creditors)?
4. How long could the organisation survive if all of its funding dried up? (Calculate the ‘survival ratio’) How does this compare to last year?

Income & Expenditure (or Profit and Loss) Account

5. Is income and expenditure broadly in balance? (Look for net income/expenditure)
6. Is there a significant increase or decrease in activity levels from the previous year?
7. What is the balance of direct project costs vs. admin costs? Is it reasonable for the size and nature of the organisation?
8. How ‘donor dependent’ is the organisation? (Calculate the ‘donor dependency ratio’)

Budget Monitoring Report

9. Is expenditure broadly in line with the budget? (+ 10 percent)
10. Is income broadly in line with the budget?
11. Are there any significant variances? If so, have they been satisfactorily explained?
12. What action is being taken to correct significant variances – e.g. under-spending as a result of delayed activity plans?
13. Are there any large bills outstanding which could substantially affect the figures shown?
14. Are we owed any large sums of money? What is being done to retrieve them?
15. Are there any un-budgeted expenses which may occur in the rest of the year?

Taken from Management Accounting for Non-governmental Organisations

For more useful financial information for NGOs, refer to

Cheryl-Lynn Freeman
Auditor and creator of NGO Accounting


NGO Services

NGO Services