May 14, 2025 - The days are getting longer, the sun is setting later, and the weather is starting to get nicer. For some, this signals the onset of spring on the horizon, but fiscal year-end for not-for-profit (NFP) organizations means that it is almost time for your financial statement audit. Similar to the spring weather, there have been many changes in socioeconomic factors and environmental transitions within the world recently, but a constant that NFP organizations can rely on is being prepared for their annual financial statement audits.

An audit request list may just feel like a mundane homework assignment, but having all of the request items ready for both planning and fieldwork aids your engagement team in meeting client, regulatory, and other imposed deadlines. Though the fiscal year has not officially ended, you should start to think about any major changes that have occurred throughout the year, such as a new director of finance that has changed your internal processes, entering into a new line of credit, having received notifications of funding cuts, or being surprised by a large generous donation from a new grantor.

While the events may have occurred months ago and appear to be innocuous and second hand, it is pertinent information to inform your auditor of in the planning stages of your audit process. A listing of these changes will assist your auditors with having information they need and a basis for discussion with you and your team. Additionally, this will allow your auditors to custom tailor their request lists and approaches for fieldwork with a gameplan for general and specific audit areas.

Your Pre-Audit Checklist: Five Keys to Success

1. Confirm Critical Dates and Deadlines: Communicate board meeting dates and regulatory requirements to your auditors, ensuring the audit timeline aligns with your organization's needs.
2. Document Financial Account Changes: Prepare a comprehensive list of any accounts opened or closed during the year, including account names, numbers, and authorized signatories.
3. Secure Portal Access: Verify that you have the necessary access credentials for all secure document-sharing platforms used during the audit process.
4. Share Challenges Transparently: Inform your auditors about any operational challenges encountered during the year — from collection difficulties and vendor issues to potential fraudulent activity or staffing concerns.
5. Develop an Internal Response Strategy: Create a clear plan with your team for addressing additional audit requests during fieldwork to maintain momentum toward established deadlines. Close your books promptly, allowing sufficient time to reconcile and verify all account schedules. Aim to provide requested materials the Friday before scheduled audit work begins

Looking Forward: Strategic Planning Beyond the Audit

Though preparing for an audit requires additional managerial work, it is important to focus on the next fiscal year ahead. Beyond preparing budgets and scheduling governance meetings, this is an ideal time to evaluate operations. Consider discussing these key areas with your management team:

• Revenue Diversification: Assess current funding streams — what's working well, what needs adjustment, and what should be discontinued?
• Compliance Assurance: Maintain rigorous compliance with federal and state funding requirements, particularly important during times of funding uncertainty.
• Fundraising Innovation: Adding new special events or other fundraising activities and expanding the number of new donors.
• Operation Efficiency: Cutting expenses in areas of the organization that are less profitable.

The Rewards of Preparation

Just like the task of spring cleaning, the preparation for an audit may cause you stress and add additional tasks to your plate if you wait until the last minute. However, the preparation done in advance will allow for a smoother audit process. Once you complete your spring cleaning you get to reap the reward of a clean space and warmer weather. Thorough preparation ensures a smooth transition through fieldwork to completion, bringing you closer to your ultimate goal: receiving a timely audit opinion that affirms your organization's financial integrity.

By approaching your audit with organization and foresight, you transform what could be a stressful obligation into an opportunity to demonstrate your organization's commitment to excellence and accountability.

How Can Citrin Cooperman Help

Citrin Cooperman’s dedicated Not-for-Profit Industry Practice professionals are available to help you at any time.  Please reach out to our team as to how we can assist your organization in becoming audit ready and navigate changing regulations and standards in the industry.