Research-Thesis: What sector-specific challenges do auditors face in the statutory audit of nonprofit organizations in Belgium?

Abstract

This thesis examines the challenges auditors face in the statutory audit of Belgian nonprofits. Despite the important economic weight that the sector represents, as well as its recent structural changes introduced by the Code of Companies and Associations in 2019, the nonprofit sector remains heavily underexplored academically. By conducting nine semi-structured interviews with practitioners of different firm size and experience, this study identifies seven challenges: the verification of nonprofit-specific revenue such as subsidies, internal control deficiencies inherent to the sector, board members lacking financial skills, earnings management towards near-zero results, the inadequacy of existing auditing standards with nonprofit realities, a competition between auditors driving fees down, and the broader mismatch between the regulatory framework and nonprofit realities. Taken together, these challenges describe a sector where audit quality is under pressure from multiple fronts, and where practitioners are left to navigate gaps that regulators are yet to address. The results present a qualitative set of information on practitioners’ point-of-view, filling a gap in the existing literature and opening avenues for the development of nonprofit-specific auditing guidance.