If you’ve got an audit coming up, it’s normal to feel a bit of pressure. But with the right systems in place and a little preparation, your nonprofit audit doesn’t have to be stressful.
In fact, it can help your organization build trust, strengthen internal processes, and improve how you use financial data to support your mission. At The Quantify Group, we work exclusively with nonprofits, so we understand what audits require and how to prepare for them.
Whether we’re supporting your existing team or acting as your full outsourced accounting department, we make sure your financial data is accurate, timely, and audit-ready. Here’s what to focus on as you get ready for your audit.
What Is a Nonprofit Audit?
A non-profit audit is a formal review of your organization’s financial records, policies, and internal processes. It’s typically conducted by an independent auditor who assesses whether your financial statements are accurate and whether your internal controls are working as they should. You might need a non-profit audit if:
- You receive a significant amount of government or grant funding
- State laws require one based on your annual revenue
- It’s written into your bylaws
- A funder requests it
Even if you’re not required to undergo an audit, some nonprofits choose to do one voluntarily. Regular audits help you stay accountable and give your board and donors confidence that your organization is managing its finances responsibly.
Start With a Strong Foundation
The best audit prep starts months in advance. If your records are current, organized, and easy to understand, you’re in a good position before the process even begins.
We help nonprofits maintain that foundation year-round. From reconciling bank accounts and tracking restricted donations to generating monthly accrual-based reports, our systems are designed to ensure your financials are always ready for review.
Clear financial reporting supports your audit and helps you make smarter decisions throughout the year. It also improves communication between leadership and finance, which can make the audit process more collaborative and less stressful.
Choose the Right Auditor
Once you know an audit is required, the next step is selecting an independent auditor. Your auditor must be a licensed CPA with experience working with nonprofit organizations.
Start your search early. It typically takes four to twelve weeks to find the right fit and finalize the engagement. Ask for referrals from peer organizations, review websites carefully, and look for auditors who understand nonprofit financial standards.
Before you make a decision, request a proposal that outlines the scope of work, estimated timeline, fees, and who you’ll be working with. You’ll want to be clear on expectations from the start.
Once you’ve chosen an auditor, they’ll provide a list of items they need from your team before they begin their fieldwork. This is often referred to as a “PBC list”—Provided by Client.
What to Expect from the Process
Your auditor will start with planning and information gathering, then move into fieldwork. During this time, they’ll:
- Review your internal controls
- Confirm key account balances
- Test selected transactions
- Review board meeting minutes and supporting documentation
Once the fieldwork is complete, they’ll compile their findings in a final report. If they identify any areas for improvement or internal control concerns, they’ll share those as part of their review.
It’s important to respond to those findings, even if the issues seem minor. Acting on audit feedback shows that your organization takes financial responsibility seriously and strengthens your case for future funding.
What You’ll Need to Provide
The specific documents your auditor requests may vary, but you’ll likely need to provide:
- Bank statements and reconciliations
- Year-end financial statements
- General ledger and trial balance
- Documentation of grants and restricted donations
- Payroll records and compensation details
- Board meeting minutes
- Investment statements
- Policies and procedures related to accounting and finance
You should also be ready to explain how your internal controls work and who is responsible for approvals and oversight. Be sure to store all requested documents in one place, so they’re easy to share.
How We Support You Through Audit Prep
We provide full audit support as part of our standard bookkeeping and controller services. That means when it’s time for your audit, we’ve already done most of the work. We help you stay ready in a few key ways:
- We reconcile accounts monthly and flag any outstanding transactions
- We track restricted donations and grant spending accurately
- We produce accrual-based financial reports every month
- We clean up vendor records and ensure data is coded correctly
- We generate custom reports for your board and finance committee
- We support communication between your team and the audit firm
Audit prep isn’t a one-time event. It’s a byproduct of how your financial system runs throughout the year. When we take that off your plate, you gain more time to focus on your programs and community impact.
Simple Audit Preparation Tips
If you’re managing your accounting internally or working with a part-time bookkeeper, here are a few audit preparation tips we recommend:
- Reconcile every bank account before year-end
- Address any uncleared or outdated transactions
- Make sure all income and expenses are properly categorized
- Review your list of vendors and clean up duplicates or inactive names
- Confirm payroll records match what’s reported in your books
- Check that your policies and procedures are documented and current
Taking time to complete these steps can help reduce back-and-forth during the audit and give your auditor a clear picture of your financial health.
After the Audit
Once your auditor shares the final report, schedule time with your leadership or finance committee to review the findings.
If there are any recommendations, document your response and create a plan to address them. Whether it’s improving documentation, adjusting internal controls, or updating financial policies, we can help you implement changes that make your systems stronger moving forward.
Audits aren’t about achieving perfection. They’re an opportunity to build better systems, protect your mission, and give your supporters even more confidence in the work you’re doing.
Let’s Make Nonprofit Compliance Easier
Nonprofit audits don’t have to feel disruptive or difficult. With the right support and preparation, they can be another way to improve how your organization operates.
The Quantify Group is here to help you with nonprofit compliance so you can be confident and audit-ready—all year long. And if your team needs a partner who understands the unique financial needs of nonprofits, we’re ready to step in. Want to simplify your next non-profit audit? Let’s talk.
