How to Prepare for a Nonprofit Audit: 5-Step Checklist
A successful nonprofit audit doesn’t start with the auditor showing up—it starts with preparation. Whether you’re preparing for your first audit or simply want a smoother process this year, here’s a 5-step checklist to get you ready.
Step 1: Schedule a Pre-Audit Meeting
Before the audit officially begins, meet with your auditor to discuss timelines, key contacts, and documentation expectations. This clarifies what will be needed and gives you a chance to ask questions upfront.
Step 2: Gather Your PBC (Prepared by Client) Documents
Auditors will request specific reports and schedules. These often include:
- Trial balance
- Bank reconciliations
- Revenue and donor reports
- Payroll summaries
- Grant agreements and contracts
- Board meeting minutes
- Keep these in a clearly labeled, centralized folder.
Step 3: Reconcile All Accounts
Ensure your general ledger is fully reconciled:
- Bank accounts
- Credit cards
- Payroll liabilities
- Temporarily and permanently restricted net assets
A clean reconciliation prevents time-consuming back-and-forth during the audit.
Step 4: Build a Digital Audit Folder
Organize your documents digitally. Use a system like:
Audit 2025
- Financials
- Governance
- Grants and Programs
- Supporting Docs
Label everything clearly. Digital access is now standard—and appreciated.
Step 5: Review Internal Controls & Policies
Auditors will test internal controls. Make sure your policies are:
- Documented
- Recently reviewed
- Consistently followed
If you don’t have a formal accounting manual or internal control summary, now is the time to create one.
Bonus Tip: Communicate With Your Team
Let your finance staff know what’s coming. Designate a point person. Stay calm, stay organized, and treat the audit as an opportunity to strengthen your nonprofit.
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Need help preparing for your audit? Cook CPA Group specializes in nonprofit audit readiness and year-end support. Contact us today for a consult.