We are approaching the time of year when nonprofit organizations with a June 30th fiscal year end are thinking about either an external audit or about submitting a final report to contributors, boards of directors and lenders to show how they are performing financially. With seemingly complex audit requirements, it can seem daunting and overwhelming to think about an end-to-end review of an entire year’s worth of transactions.
Here are five things to do NOW to ensure your next audit goes smoothly.
- 1. Meet with your Fundraising/Development team
- Review outstanding pledges from last year to verify that all were received; and review current outstanding pledges to ensure these weren’t booked and then subsequently received but not communicated to you.
- Reconcile your donor database for contributions received during the year. You should be able to explain variances related to time & the amount received.
- If possible, review documentation of all contributions of $5,000 or more to ensure that these were not restricted donations.
- 2. Send out a year-end reminder to all staff
- Set a deadline for all employee related expense reimbursements.
- Walk through anticipated expense obligations for the last month of the year. Confirm if any of these invoices would come from routine vendors/consultants/contractors after delivery of their services. If yes, get an estimate for them in order to book your accruals.
- Validate all timesheets that are required for audit. Verify that these timesheets are complete and include the appropriate supervisor’s signoff.
- 3. Review your reconciliations for balance sheet accounts
- Review your bank reconciliations to make sure any uncleared checks are no more than 3 months old. For any that are, either void and reissue these checks or write off the expense.
- Review any restricted balances that are on the balance sheet from the last year’s audit and ensure that these are either spent /released or are validated to continue to be held separately for the next year.
- Review your fixed assets listing to ensure that none of the items with depreciation expenses are fully depreciated.
- 4. Review any audit adjustments that were booked at the last fiscal year end to ensure that you’re not forgetting anything
- Auditors are going to review adjustments from the prior year, so having these booked before the auditors arrive can avoid official “audit adjustments” that have to be disclosed.
- 5. Prepare your audit schedules through the end of May
- This is to ensure that that all you have to do is drop in an activity for the last month and avoid any last-minute surprises.
- Review your Trial Balance through May to make sure it balances.
- Have a balanced Trial Balance ready to turn over to the auditors one week before the audit field work begins.
Being prepared for your audit will help the entire process go faster so you can get back to the new fiscal year. Quatrro has a proven history in helping its nonprofit clients face their auditors with confidence. If you are a nonprofit leader and would like professional advice on how to streamline your financial processes and take the dread out of your next audit, Click Here to reach out to our expert team!