Reconciliations are current and reviewable
Each material balance-sheet account should be supported at period end. The reconciliation should show what makes up the balance, identify reconciling items, and contain evidence that someone reviewed the work. A bank reconciliation alone does not establish that the full balance sheet is ready.
Key schedules roll forward during the year
Maintain recurring schedules for contributions receivable, prepaid expenses, fixed assets, debt, accrued liabilities, net assets with donor restrictions, grants, and other significant balances. Updating these schedules monthly or quarterly makes year-end preparation part of the normal process.
- Tie each schedule to the general ledger
- Retain support for additions, reductions, and adjustments
- Explain old or unusual items before year-end
- Document significant estimates and management judgments
Restrictions and grant activity are traceable
Contribution agreements, grant awards, modifications, reimbursement requests, and release calculations should connect to the accounting records. Clear documentation helps management support revenue recognition, restrictions, receivables, and program reporting without reconstructing the story months later.
Internal controls exist in practice
Policies are useful only when the actual workflow reflects them. Document who initiates, approves, records, reconciles, and reviews material transactions. Where staffing limits separation of duties, use thoughtful compensating reviews by leadership or the board.
The reporting package is reviewed before distribution
Compare current results with budgets and prior periods, investigate unexpected relationships, and ensure supporting schedules agree to the statements. Keep a record of questions and corrections. This review improves management reporting and reduces surprises during the audit.
Coordination begins before fieldwork
Review the auditor’s request list early, assign responsibility for each item, agree on file naming and delivery, and raise unusual transactions before testing begins. Management remains responsible for the financial records, while an organized accounting partner can help make that responsibility manageable.