Five Tips When Preparing Your June 30 Audit
March 24, 2022
By Christine Hall
In the article “5 Tips When Preparing Your June 30 Audit,” written for The NonProfit Times, Christine Hall shares tips that not-for-profit organizations can use as they prepare for their June 30 year-end audits.
1. Document Changes to the Internal/Financial Controls and Assess Risks Related to Information Technology
With the switch to remote and hybrid work environments, it is important to formally document internal control changes in preparation for the annual audit. Many organizations have experienced workforce shortages over the past few years due to the pandemic. Therefore, now more than ever, it is key to verify that duties are still properly divided among employees.
It is also essential to review your IT controls and regularly assess the various IT risks associated with the remote work environment. In the coming years, annual audits will start to focus more on IT, so documenting any IT controls changes is crucial. Also, make sure to keep employees informed of said IT risks, and conduct regular monitoring to look for weak areas.
Finally, review the System and Organization Controls (“SOC”) reports of third-party vendors prior to your year-end audit to ensure that there is nothing disclosed in the reports that would cause a red flag. Your auditors will ask that the reports be readily available to them during the engagement.
2. Assess Collectability and Sustainability
As part of the audit process, auditors will want to test the assessment of an allowance for doubtful collections. To prepare for this, review collection history and your allowance for uncollectible accounts to help you complete an accurate assessment.
Another major assessment that management should conduct is a liquidity analysis to determine not only sustainability but whether the entity can fund adequate reserves.
Both assessments are important when preparing the liquidity disclosure and managing the liquidity of the organization in the future.
To see all five tips, read the complete article here.