Get your nonprofit ready for audit season before year end

Spring audit fieldwork may seem distant when your nonprofit is busy with year-end fundraising and program demands. But for organizations with a December 31 year end, the final months of 2026 offer a valuable opportunity to organize records, resolve accounting questions and coordinate with auditors.

Reconcile and support balances

An annual financial statement audit can support donor confidence and may be required by state law or funding agreements. Preparing now can help your organization meet reporting deadlines and reduce disruptions to staff and the people you serve. One priority is preparing financial records for review. You shouldn’t wait until audit time to reconcile accounts such as cash, receivables, pledges, payables, accruals and revenue.

Reconcile general ledger account balances to supporting schedules, including bank reconciliations and receivables and payables aging reports, as well as external records such as bank statements. Perform reconciliations regularly throughout the year — generally monthly for cash and other significant or high-activity accounts — and resolve differences promptly. And don’t forget to reconcile database information maintained by nonaccounting departments (such as contributions, event revenue, registration revenue and sponsorships) to the accounting records.

Also collect all supporting documentation and, if anything is missing, alert auditors early. You may need to request duplicate invoices from vendors or ask donors for copies of letters describing contribution restrictions. Before closing the books, review year-end transactions to ensure that revenue and expenses are recorded in the appropriate reporting period and that donor restrictions are properly reflected.

Coordinate requests and deadlines

As part of their planning process, auditors typically compile a prepared-by-client (or provided-by-client) list of materials. Request the list before year end and work with your auditors to establish deadlines for each item. Assign responsibility for gathering materials and allow time for internal review. Submit everything on the list according to the timeline so you don’t delay fieldwork or the issuance of the audit report or risk missing board, grantor or regulatory deadlines.

To ensure accuracy, review all information before you send it. Confirm that supporting schedules agree with the trial balance and use your auditors’ designated secure method to transmit sensitive records. Also, before fieldwork begins, identify significant changes in account balances from the previous year. Your auditors will ask about significant revenue and expense variances. Be ready to explain them and any budget variances promptly and clearly, with supporting documentation.

Address prior audit findings

Don’t reinvent the wheel for every audit. Reports from previous years provide useful guidance. Review prior years’ audit adjustments, understand why they were needed and determine whether similar issues have arisen this year.

Also confirm that you posted all approved adjusting entries from the last audit and that current-year opening balances agree with the prior year’s audited ending balances. Unposted adjustments or opening-balance discrepancies could misstate your current-year financial statements. In addition, review any internal control deficiencies your auditors communicated and document corrective actions you’ve taken or that are still needed.

Get started early

A smoother spring audit starts with the work your nonprofit does before year end. By organizing records, resolving discrepancies and coordinating with auditors now, you can give your staff more time to address outstanding issues while keeping daily operations on track. Contact us to review your year-end accounting and prepare for your nonprofit’s next audit.

© 2026