As a supplement to our Knowledgebase, DataArts aims to use Data Digest as a forum to provide our participants with timely tips and insight to ensure their CDP experience is a success. With the end of 2016 fast approaching, DataArts’ own Finance Manager, Alicia McClung, (who also completes DataArts’ own annual CDP submission) shares the following advice on preparing for your annual audit:
Most nonprofit organizations have fiscal year-end dates of June 30 or December 31. If yours is the former and your organization has an annual audit or review by an independent accounting firm, hopefully your audit is complete. If you have a December 31 year-end date, this is a great time to begin thinking about getting ready to close your financial books and prepare for your audit or review.
Here are some tips to help you get ready for your audit or review:
- Prepare. When you close a month or prepare anything that might be reviewed by the auditor later on, be as thorough as possible.
- Be in communication with your auditor. Share any new policies, standard contracts, or changes to departmental structures.
- Share your financial procedures manual with your auditor. It will make their testing go faster.
- Before your audit, review all of your documentation. Think about what items might raise a red flag, and be prepared with paper back-up and documentation.
- Keep a log of your month-end journal entries and make sure they were all approved.
- When the year closes, get a list of work papers that the auditors will need to review.
- If something happens during the year that doesn’t conform to company policy, document the event and how it was handled to show that management is aware of the situation. This can save you from a note in the auditor’s management letter later on.
- During the last month of the year, have a pre-audit meeting with the audit committee of your board, and the auditor to set expectations.
- Get to know your auditor.
- Address audit adjustments and any comments in a management letter immediately after the audit.