If your nonprofit’s fiscal year is the same as the calendar year, then you are very busy now preparing for the annual financial audit. This is often a 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 three 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 general ledger 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 keep things organized and easily find files requested when the auditor is on site. Also, keep either a scanned copy or hard copy of all items you provide to the auditor, and never give away original documents.
- Finally, 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.
We've collected a wide variety of articles, tools, and documents on nonprofit fiscal best practices for you on our Financial Management Resources page; here's a quick sample:
Our Operations Manager Lorraine Faithful has recently celebrated her 10th anniversary with NLC! She is our calm in the storm and generally the first face you see in our offices and the first voice you'll hear when you call. She is a master of customer service as well as our finances, HR, and daily operational needs. Lorraine served as the executive director of a nonprofit in Hawaii before she joined the NLC; next time you're speaking to her, ask about Hawaii--or her family: She has two grown sons and three beautiful grandbabies.