Audit season can be stressful for nonprofits, but it doesn’t have to be. With a little preparation, organizations of every size—from arts groups and faith‑based organizations to human services agencies—can approach their annual audit with confidence.
“When nonprofits prepare well, an audit becomes so much more than a compliance requirement,” said Sara Sweers, CPA, a partner in Kruggel Lawton’s Portage office. “It turns into an opportunity to strengthen financial transparency, build donor trust, and give leadership clearer insights into the organization’s health.”
Here’s a practical, approachable checklist to help nonprofits get audit ready this spring.
1. Start With Your Financial Records
Auditors rely on complete, organized financial information. Make sure you have:
- Bank reconciliations through year-end
- Updated general ledger entries
- Clear documentation for revenue and expenses
- A current chart of accounts
If something feels messy, address it early rather than waiting until the auditors arrive.
2. Review Your Internal Controls
Audits aren’t just about numbers, they’re about processes. Nonprofits should be able to show:
- Who can approve expenses
- Who records transactions
- Who has access to bank accounts
- How receipts and donations are handled
Even small organizations benefit from simple, well‑documented controls.
3. Gather Supporting Documentation
Your auditor may ask for:
- Grant agreements
- Donor letters
- Board minutes
- Payroll records
- Major contracts
- Lease agreements
Having these documents ready saves time and allows the audit to move smoothly.
4. Confirm Donor Restrictions
If your nonprofit receives restricted gifts, make sure you have:
- Written donor communications
- Clear tracking of how funds were used
- A schedule of restricted net assets
This is one area where nonprofits often struggle—the cleaner the documentation, the better.
5. Connect With Your Board
Audit results reflect leadership practices. Before the audit begins:
- Ensure board minutes are complete
- Provide board members with financial reports
- Review policies on conflicts of interest, whistleblower protections, and record retention
6. Ask Questions Early
Your auditor is a resource. If you’re unsure about how to treat a revenue stream, classify an expense, or present a new program, asking questions early prevents surprises later.
If your organization is preparing for an upcoming audit or looking to strengthen its financial processes, the right guidance can make all the difference. Kruggel Lawton’s award-winning team understands the unique challenges nonprofits face and is committed to supporting organizations of every size with clarity, confidence, and care.
