Year End Accounting Checklist for Nonprofits

Our firm can provide you with a financial assessment tailored towards the people, processes and technology that will help your organization make improvements to strenghten its internal processes and controls, improve segregation of duties, evaluate accouting staff and software, and determine where risks exists and how to mitigate them. We can help you implement this year end accounting checklist to ensure you are ready for your annual audit or review. Also, we can help you update your financial policies and procedures manuals as this usually the best time of the year to make these revisions as well.

Your financial policies and procedures should lay out clear expectations and encourage adherence. Your financial policies and procedure manual should include audit, budget, and record retention policies. Please contact us if we can help you document your financial polices and procedures. If you don't currently have a financial policy and procedures manual, we are providing a sample nonprofit organization financial policies and procedures manual for FREE.

Year-End Accounting Checklist:

1099 reporting
Review and collect any missing supporting documents or receipts
File an annual report
Update Financial Policies and Procedures Manual
Review and document any internal control procedures to ensure compliance with best practices
Confirm and record year end journal entries
Review Accounts Receivable Aging Schedule for possible write offs or follow up for overdue payments
Record Pledges Receivables for multi-year grants
Review Accounts Payable Aging Schedule and insure all invoices are received and accrued
Review other current liabilities include payroll to reconcile, tax filings are current, and make any adjustments
Review deferred revenue and adjust as needed for services not yet provided
Reconcile all loan balances with lender statements to ensure principal and interest is properly recorded in the general ledger accounts.
Reconcile all balance sheet accounts
Reconcile bank and credit cards accounts to bank and credit card statements and to the general ledger. Resolve any older outstanding checks or deposits to finalize year end reconciliations.
Reconcile investment accounts to statements and general ledger including realized and unrealized gains or losses. Review Investment interest, dividends, or fees to make sure that are properly recorded and classified.
Reconcile prepaid insurance and prepaid expenses and correctly recorded to the proper period.
Ensure all capital expenditures are accurately recorded and categorized including reviewing repair and maintenance expense accounts for any expenditures that need to be capitalized. Review fixed asset and depreciation schedule for any additions or disposals during the year including adjusting depreciation expense and related accumulated depreciation as needed.
Ensure all donatation, grants, contracts, earned income, and fundraising income is properly recorded and categorized
Record all operational expenses including including accruals for year end invoices
Ensure compliance with W2's and 1099's reporting for employees and contractors
Complete 941 reconciliations for all payroll accounts, ensuring wages, taxes, and benefits are accurately recorded
Verify that all expense reimbursements are accurately reported and properly supported with receipts
Review Grant Income allocation to restricted and unrestricted funds
Review Grant Agreements to ensure revenue recoginition is done properly
Review and reconcile grant expenditures to ensure that are allowable to the grant agreement
Review Grant report for compliance with grantor requirements
Document any unspent grant funds and determine if they need to be returned or submit a request to have them carried forward to future periods
Prepare comparative balance sheet and income statement to analyze variances and identify any reclassifications
Prepare cash flow statements to confirm changes in cash
Compare budget to actual and identify significant variances
Close the period once year end adjustments are recorded to avoid changes to the final records

Review Paid Time Off for Vacation and Sick and make any accounting adjustments
Calculate any year end payouts for bonus, incentives, and commission related payments
Backup important data including workpapers, contracts, files, financial records, and reports to insure there will not be any lost data due to data breaches or disasters.
Review document retention policy to ensure compliance
Compile and organize all supporting documentation (invoices, receipts, contracts, agreements) for annual audit
Ensure all auditor schedules (depreciation, investments, receivables, and payables) are updated and available
Clean up and archive redundant files by cleaning up unnecessary data and update data retention policies
Evaluate your technology and make changes as needed
Review net assets are categorized with and without restrictions and update net asset schedule. Reconcile prior year end balances to the current year's beginning balances to ensure net assets roll forward properly. Record any prior period adjustments and ensure that board designated or endowments are properly tracked and reported.
Review whether you continue or start to conduct an outside audit-You might have addtional federal funds or new Foundation funding that requires an annual audit. There are several independent organizations that recommend different annual revenue thresholds from $250,000 to $1,000,000 to recommend an audit. The Wise Giving Alliance has a $250,000 annual revenue threshold for audits, while the Standards of Excellence Institute‘s threshold is $300,000. The Independent Sector recommends a threshold of $1 million dollars. Our recommendation would be that organization is excess of $250,000 start evaulating an audit and organizations of $500,000 or more most likely need to have an annual audit. The three inherent benefits that an audit provides include donor and communty confidence, financial best practices, and some protection against fraud. A less expensive alternative to an audit would be a financial statement review.

Let us know how we can help you with your year end to make sure you are ready for your next annual audit or review.

James Simpson | 12/16/2024

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Year End Accounting Checklist for Nonprofits