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July 22, 2022 | 5 min read
Audit season is underway, and while last year is already wrapped, we have some great tips for being more prepared for next year. Now is the time to organize for the year ahead, and by staying diligent you will be able to reduce stress and gain efficiency for next year.
Without further ado, 5 tips to streamline next years audit prep:
Staying up to date with your fund accounting by completing month end closes is both best practice and leads to less stress. After all, they are called month end closes for a reason. By keeping up with the monthly closes and balance sheet reconciliations as they occur there will be less work needed in searching for receipts and other information.
Keeping current with your fund accounting monthly also gives you a snapshot of your organization’s finances. This can be used as guidance to adjust spending in the future months. And when it comes time for audit prep at year end, you will save time because you will already be prepared and will only have to complete a review rather than working through the full process.
When doing day to day activities, your brain can turn on autopilot. Working with AR and AP is no different. A simple double-booking of revenue or an expense can create a painstaking exercise when you have to find the errored entry. By going back and giving the ledger a second check, it can help reduce these later headaches. As you are going through and confirming that nothing is double-booked, it is recommended that the remaining subsidiary ledgers should also tie to the general ledger. At the very least doing this at the end of the month will remove the hassle of last minute adjustments.
Regardless of if your accounting team is internal or external, all information that will be shared with your auditor should be shared to your accountant first. This allows your accounting team to ensure everything is up to date and accurate which helps to ensure a clean audit later.
This tip is true throughout the year, but also continues into the audit process as any additional information requested from the auditor should also be shared with your accountant / accounting team. If not, it can create a mess that will be hard to clean up.
When donations or grants are given with restrictions, it is very important to adhere to the restriction, or run the risk of losing the contributions. While the money is recorded at the time of donation, grant or pledge , it may not be used for another year or even two. By creating classes specific to your restricted donations and grants, it becomes easier to have your organization’s net assets roll forward.
Donations and grants are easier to manage when they are classed, and expenses work the same way. By creating 3 general class categories it will be easier to record expenses and manage each domain. A common division for this is: Program, Management, and Fundraising:
Hopefully these tips will help to streamline the process for next year!
Bonus Tip: to get the most benefit from today’s tips it’s important to keep up throughout the year and not wait until the year end.
If you would like to learn more about our accounting team, check out our website.
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