Is it “annual fiscal audit time” for your nonprofit? It is if your nonprofit’s fiscal year is the same as the calendar year. If you closed your fiscal year at the end of December, then you are most likely getting prepared for your auditors to examine your financial statements. This can be a busy and stressful time for you and your financial staff, but with a little forethought and planning ahead, this process can go smooth and easy with these simple tips:
- Begin one year in advance to prepare for the audit! It makes a lot of sense to prepare on a monthly basis the general ledger activities and transactions that auditors need to review. This includes your balance sheet items like receivables, payables, prepaid expenses, fixed assets, etc. Create your monthly spreadsheets for all accounts, then record transactions each month. These reports will be complete at the end of the year and ready to give to the auditors.
- Keep all your accounting files in one designated place on your server or hard drive. This helps to stay organized and easily find files requested when the auditor is on site and hadn’t previously requested them. Also, keep either a scanned copy or hard copy of all items you provide to the auditor, and never give away original documents.
- Get to know your auditors! An audit should be a two-way conversation about your business and financial situation. Don’t be shy about asking for advice or assistance on fiscal matters during the year or during the audit. Auditors are more than happy to help solve issues as they occur which of course will make their auditing job easier in the long run.
New resources about nonprofit fiscal audits can be found in the Financial Management Resources area of our website such as:
- Audit or Review? What Should I Do?
- Audit Guide for Charitable Nonprofits
- Audit Guide for Audit Committees of Small Nonprofit Organizations
- Audit Prep: Improve Your Audit Prep Process: Tips from the Experts, Accounting Management Solutions, Inc.