7 steps to planning a successful not-for-profit audit
Year-end financial statement audits serve a valuable purpose in helping maintain the financial integrity of not-for-profit organizations so they can successfully complete their missions. These audits can be more effective and less challenging with a little bit of preparation and planning on the part of the not-for-profit management and finance team.
This preparation starts with your accounting system, because everything you do on a monthly basis will pay dividends as you gear up for your year-end close and the audit. Chances are your accounting system is very good for everyday things, such as processing customer/donor billings, receiving payments, paying bills, and making payroll. And you probably do other things every month in the normal course of your monthly closing cycle, such as review and reconcile various accounts.
Having these processes in place provides a good start in preparation for your year-end audit. Here are a few more ideas to help your year-end audit go smoothly:
Beginning balance + additions – reductions +/- adjustments = Ending balance
Completing the schedule ensures that the account balances roll forward from the prior year end to the current year end, which provides assurance that the income statement effects of the changes have been properly recorded.
Below are the primary balance sheet accounts (and related income statement accounts) that you will want to reconcile and roll forward. Be sure to add other accounts to meet your organization’s unique needs.
Editor’s note: Want to learn more about what to expect during your 2017 year-end audits? Join an AICPA webcast on May 5 from 3 to 5 p.m. ET, to get a strategic look at what’s important for the not-for-profit industry in 2017.
Do you have advice for year-end planning? Please email your suggestions to NFPSection@aicpa.org.
Tim McCutcheon, CPA, is a partner in Eide Bailly LLP’s national not-for-profit practice, and he also serves as chair of the AICPA Not-for-Profit (NFP) Section’s Advisory Council. To comment on this article, contact Chris Baysden, senior manager of newsletters at the AICPA.
Research & References of 7 steps to planning a successful not-for-profit audit|A&C Accounting And Tax Services