How to Prepare for Your Nonprofit Group’s Audit

Welcome to the Two-Minute Treasurer’s Tip Podcast. I’m Cyndi Meuchel, and today we’re talking about how to prepare for your audit.

Ideally, you will have been preparing for your group’s audit, or sometimes it’s called a financial review, all year long by tracking transactions, reconciling your bank accounts, and basically keeping your paperwork organized. If not, you might have a little bit of catch up to do.

Most audits take place right after the financial year has ended. Another good time to hold a financial review is when treasurers transition, but ideally, both of these events happen at the same time making it necessary to only do this once during the year.

What to Have Handy for the Audit

To streamline the audit committee’s efforts, be sure to have your paperwork organized by month. Have handy:

• your bank statements for the financial year
• original receipts
• Reconciliation Reports
• an Annual Report or an Audit Report (which by the way is super easy to
  get out of MoneyMinder)
• the group’s checkbook
• deposit slips, check images or cleared checks
• your budget
• reporting access to your nonprofit accounting tool such as MoneyMinder

Here’s a hint: if you sequentially order your canceled checks, and tape receipts to the check authorization form, it will speed up the work of the committee significantly.

The committee or the auditor will then verify that your numbers are accurate and they’ll assess your procedures. They may also suggest any controls or procedures that you might implement to improve the integrity of your books. They may even look at your budget and assess the group’s performance. At the end of the day, they’re really looking to make sure that your finances are in order, and they’ll present a signed statement and/or report stating the review has been completed and that the books have been found to be in order. And if not in order, they’ll make recommendations for improvement.

Don’t be intimidated by an audit. Remember, it’s just a best practice to ensure the financial health of your organization.

But wait, how do I conduct an audit?

• If you’re a school group, you’ll find our Complete Guide to PTO & PTA Audits & Financial Reviews.
• Other groups will find audit guidelines in our free guide, the Treasurer’s Compass.