Audit season without the scramble: what your auditor will ask for, and when
Most audit stress comes from surprises: a schedule nobody prepared, a grant file that’s missing or a question about a transaction from eleven months ago. The good news is that auditors ask for many of the same things every year. If you know what’s coming, you can be ready for it.
A quick note: we don’t perform audits. We help nonprofits prepare for them and work alongside their independent auditor. This post is written from that side of the table.
Before year end: plan
Agree on the timeline. Confirm the dates for planning, any interim work, fieldwork and the final report with your auditor. Work backward from any deadlines that depend on the audit, such as grant requirements, state charitable registrations or your Form 990.
Ask for the request list early. Most auditors provide a “provided by client” (PBC) list. Get it as soon as possible, and assign an owner and due date to each item.
Review last year’s findings. If the auditor raised findings or management letter comments, make sure they’ve been addressed, and document how.
Right after year end: close carefully
Close the year. Complete the year-end close, with every balance sheet account reconciled to support, not just the bank accounts.
Prepare the core schedules. Auditors commonly ask for:
- bank and investment reconciliations
- receivables and pledges, with aging
- prepaid expenses and accrued liabilities
- fixed assets, additions and depreciation
- deferred revenue and refundable advances
- net assets with donor restrictions, including releases
- grant revenue and expenses by award
- payroll reconciliations to payroll tax filings
- a functional expense allocation
Gather the documents. Board minutes, new contracts and leases, grant agreements, significant gift letters and any debt documents.
During fieldwork: respond quickly
- Have one point of contact. One person routes requests and tracks what’s outstanding.
- Answer within a day or two. Slow responses are one of the main reasons audits run long.
- Keep a request log. List each request, who owns it, when it’s due and its status.
- Explain, don’t just send. A short note with each schedule saves a round of questions.
After fieldwork: finish well
- Review proposed adjustments and understand each one.
- Read the draft financial statements and notes carefully. Check the numbers and the descriptions of your programs.
- Plan responses to any findings, and assign owners.
- Write down what went wrong this year, so next year goes smoother.
Grant-funded organizations
Under the federal Uniform Guidance, an organization that spends $1,000,000 or more in federal awards during a fiscal year generally needs a Single Audit. A Single Audit adds testing of your federal programs and related controls. The $1,000,000 threshold applies to fiscal years that began on or after October 1, 2024. For earlier years it was $750,000. Confirm with your auditor whether a Single Audit applies to you, and plan for the extra time and documentation.
How we help
We spent six years in financial statement audit, so we prepare your books the way auditors review them. We build the schedules, manage the request list and work with your auditor from your side.