The Impacts of Audit Transparency on Increasing Trust in Nonprofit Organizations

This study explores the role of audit transparency in improving satisfaction among stakeholders in nonprofit organizations. Audit transparency has relieved a loss of at least $40 billion annually in nonprofit organizations. Evidence or full disclosure of audits has significantly contributed to increasing transparency and reach performance in nonprofit organizations. Nonprofit managers and leaders need to explore audit effectiveness to prevent misconduct behaviors and ensure sustainability. Using Wallace’s auditing theory, we found a statistically significant relationship between audit transparency, number of auditors, frequency of audit meetings, number of audit recommendations, and auditors’ skills and expertise. As all independent variables align with the dependent variable audit transparency, auditors’ skills and expertise have a substantial impact in predicting audit transparency. One of the biggest strengths of audit transparency is to increase trust among shareholders, which comprise employers, employees, and organization partners. The findings are helpful for lawmakers, government officials, board members, auditors, investors, financial advisors, and academic researchers to better understand the impacts of audits’ full disclosure on increasing trust in nonprofit organizations.

 Keywords: Audit effectiveness, Shareholder satisfaction, Nonprofit organizations