Here is a good post from our friends at Blue Avocado. http://www.blueavocado.org/node/718 It carries the scary title "I Survived an IRS audit." However, as with most things in life, if you are doing nothing wrong you have nothing to hide. The only reason to fear an IRS audit is if you are doing something inappropriate. Granted, I suppose you can fear the time it will take. And I suppose the fear that they will find an inadvertent honest mistake is a concern.
Blue Avocado recently published a great letter from a lawyer regarding the difference between a Financial Review and a full-blown Audit. Check it out here: http://www.blueavocado.org/content/attorney-recommends-review-instead-audit Clients frequently ask us if they need an audit or a review. This can be dictated by state requirements, the need for a Federal A-133, or by specific funders requirements. The state of New York has especially onerous requirements that have a very low threshold for when non-profits have to conduct an audit.
There are a lot of accounting software options out there for non-profits. When picking an accounting solution, there is always a trade-off between cost and quality. Cost can be thought of relatively straight-forward: what does it cost to buy this thing, configure this thing, and run this thing. Most smaller packages such as Quickbooks require very little configuration. It is what it is. Larger software packages such as NetSuite, MIP Fund by Sage, Financial Edge by Blackbaud can require extensive time and energy (and $$) for consultants to turn on and off the hundreds of features to fit your exact needs.