It’s that time of year again: your auditor has sent you an engagement letter and is likely preparing a request list of documents for this year’s audit. As your organization’s fiscal year comes to a close, it’s time to look back at the people you’ve served and how you’ve funded that service.

Preliminary work begins around 3 months before a not-for-profit organization’s year-end date, and includes beginning important tests and gathering background information for the final phase of the audit. This information forms the foundation for the work done after the end of the year, which makes it a crucial first step to completing your organization’s financial statements.

This time of year can be stressful for non-profits and their bookkeepers, but a successful and smooth preliminary phase will give organizations momentum and confidence going into the audit itself. By keeping in touch with your auditors and gathering required documents before they ask for them, you can reduce stress on your team and help get the audit done on time.

Pull Information Early

Because non-profits can be tricky to audit, the request lists vary significantly from organization to organization. In addition, regulatory bodies like government grantors may require information beyond the scope of a normal audit. For these reasons, it’s impossible to say exactly what documents you must prepare ahead of time, although there are several that are common across most non-profit organizations during preliminary work.

  • Monthly bank statements throughout the year
  • Insurance declaration pages – showing the coverage period, coverage amount, and cost of premiums
  • Loan invoice/statement for one month (can be any month)
    • If the loan has been refinanced in the last year, provide the new loan agreements
  • Contract agreements
  • Descriptions of legal issues with an assessment by management
  • Bank and mortgage confirmations
  • Disbursements – sample disbursements used in the audit require a copy of the invoice and supporting documentation as well as a cancelled check
  • Receipts – sample receipts used in the audit require a copy of each check, deposit slip, bank remittance, and bank statement
  • IRS or state agency notices received during the year
  • Observations and feedback from prior audits and other preliminary discussions

Though gathering these documents ahead of time may not guarantee you can complete your non-profit audit preliminary work faster, it does help take stress off your team when your auditors submit their lengthy request list.

Expect A Positive Experience

Another way to help relieve stress during preliminary work is to set clear and high expectations for the experience. Anticipate that conversations will be pleasant, people find solutions to problems, and your audit will be completed on-time, if not early.

Your organization deserves to work with a CPA firm that values your team as much as it values your business. If your experience this year falls far short of your high expectations, you may want to consider switching CPA firms. When you create and distribute RFPs, look for firms that communicate effectively, answer all your questions, and make you feel at ease.

And as always, feel free to add Lemler Group to your list when you go out for bid. We’d love to show how our friendly auditors can serve your not-for-profit organization!