10 Tips for Nonprofit Audit Preparation to Stay Compliant

Audits are essential for ensuring transparency, accountability, and compliance in nonprofit organizations. They build trust with stakeholders and demonstrate your commitment to regulatory standards. While the process can seem overwhelming, these tips for nonprofit audits will help your organization stay organized, compliant, and ready for any audit.

1. Keep Bylaws and Constitutions Updated

One key step in nonprofit audit preparation is ensuring that your bylaws and constitution are current. Regular updates show auditors that your organization prioritizes governance and compliance, which is critical for maintaining trust with stakeholders.

2. Update Policies to Reflect Best Practices

Outdated policies can hinder a smooth audit process. Review and update critical policies, such as financial management, conflict of interest, whistleblower, and record retention policies. This ensures your nonprofit aligns with current regulations and best practices, a crucial part of nonprofit audit preparation.

3. Maintain Up-to-Date Procedures

Documenting internal procedures for accounting, grant management, and other key operations is one of the most effective tips for nonprofit audits. Updated procedures ensure consistency in your processes and make it easier to demonstrate compliance during an audit.

4. Conduct Quarterly Reviews of Accounts

Regularly reviewing and reconciling accounts—such as bank accounts, grants, and financial statements—helps prevent errors and discrepancies. Quarterly reviews are a proactive step in nonprofit audit preparation, ensuring your financial records are accurate and ready for inspection.

5. Keep Detailed Schedules for Non-Accounting Items

For items not tracked in accounting software, such as fixed assets or liabilities, maintaining detailed and accurate schedules is critical. These schedules should align with your general ledger, which simplifies the reconciliation process during nonprofit audit preparation.

6. Organize Complete Documentation for Transactions

Auditors require complete documentation for all transactions, including receipts, invoices, approvals, and contracts. Organize these records by fiscal year, and if applicable, by grant. One of the most practical tips for nonprofit audits is to ensure your documentation is easily retrievable and fully complete.

7. Conduct Annual Internal Audits

An annual internal audit is one of the most valuable tips for nonprofit audits. It allows you to identify and address weaknesses in your financial processes ahead of time. Whether performed in-house or by hiring a consultant, internal audits prepare your organization for external reviews.

8. Create a Year-End Closing Checklist

To ensure a smooth audit process, prepare a comprehensive checklist for year-end tasks. Include reconciling accounts, making adjusting journal entries, and preparing financial statements. A well-organized checklist is a cornerstone of effective nonprofit audit preparation.

9. Maintain Clear and Complete Board Minutes

Auditors often review board minutes to verify major financial decisions, such as budget approvals and changes in governance. Ensure your board minutes are detailed, accurate, and easily accessible—this is a crucial aspect of nonprofit audit preparation.

10. Communicate Early and Often with Auditors

Developing a relationship with your auditor is one of the most practical tips for nonprofit audits. Engage with auditors early in the process, provide requested documentation promptly, and maintain open communication to address any questions or concerns.

Conclusion: Simplify Nonprofit Audit Preparation

Following these tips for nonprofit audits will help your organization stay organized and compliant while building trust with funders and stakeholders. Effective nonprofit audit preparation ensures that your nonprofit is ready for any audit, reduces stress, and enhances accountability.

How Wolverine Precision Financial Operations Can Help

At Wolverine Precision Financial Operations Group, we partner with nonprofits to simplify nonprofit audit preparation. We guide you through these 10 steps to ensure that, when it’s time for the audit, the process is smooth and stress-free.

Our team provides comprehensive support, from policy and procedure reviews to documentation organization and more. We’re committed to helping nonprofits maintain compliance and build confidence with stakeholders.

Interested in making your next nonprofit audit easier? Email us today at info@wolverineprecisionfinops.com to learn more about our audit support services!