Jitasa Nonprofit Blog

Are You Audit Ready? Part 3

Yesterday (read Part 1 and Part 2 of this series) we talked through best practices in the first three of the following four key questions and critical next steps

  1. Do I need an audit or will a financial review suffice?
  2. When should I conduct my audit?
  3. What are the most critical criteria in selecting an audit firm?
  4. What do I need to do to prepare for my audit?

Today we will cover the last question / next step.

 

So, what do I need to do to prepare for my audit?

In preparation for your annual audit, you will want to ensure that the following bookkeeping and accounting activities have been completed:

1.  Have you captured every transaction?

  • Have you looked for unrecorded expenses?
  • Have you recorded donations received at year end, but not deposited?
  • Have you recorded pledges and grants receivables?

2.  Have you reconciled all of your bank accounts?

  • Checking
  • Savings
  • Investments

3.  Have you analyzed for the following:

  • Adjustments for prepaid expenses?
  • Allocations of indirect expenses to program costs?
4.  Have you reviewed expenses for items that should be capitalized? Do you have a capitalization policy?

 

5.  Have you created a first pass for the key financial reports and supporting schedules?

  • Do you have schedules of all of your balance sheet accounts?
  • Do you have a schedule of temporarily restricted funds?

 

Audits can sound intimidating, especially if it is your first time.  With proper planning in selecting the right auditor, preparing and analyzing your financial records in advance, and being timely in efficient in responding to requests from your auditor, you can set yourself up for the best likelihood of having a smooth audit.

Mary Soper, Jitasa - Director of People Development, CPA

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