Audit readiness
An audit that isn't a fire drill.
Most difficult audits are not caused by bad bookkeeping. They are caused by preparation that starts the week the auditors arrive. Truvio prepares nonprofits for the independent audit across the year, assembles what the auditors ask for, and handles fieldwork questions directly so they stop landing on the Executive Director.
The pattern
Why the same audit goes badly every year.
Preparation starts when the auditors arrive
The request list lands, and only then does anyone begin building schedules. Work that could have been a byproduct of twelve monthly closes becomes a six-week project during the busiest part of the year.
The schedules are rebuilt from scratch annually
Nobody kept the workpapers from last year, or they live on a laptop that left with an employee. The same reconciliations get reinvented every spring.
Questions route to the Executive Director
Auditors ask technical questions. If no one on staff can answer them, they escalate to the ED, who is now spending audit season doing accounting instead of running the organization.
The management letter repeats itself
The same control deficiencies appear year after year because nobody owned the remediation. Boards notice this, and so do funders who read the audited statements.
The request list
What auditors actually ask for.
The specifics vary by firm and by organization, but the shape of the list does not. None of this should be a surprise in March.
- Trial balance tied to the financial statements, with a clear audit trail to the general ledger
- Bank, investment, and balance sheet account reconciliations for the full year
- Revenue testing support: grant agreements, contribution documentation, and the revenue recognition applied to each
- Net asset rollforward separating with donor restriction from without, including releases
- Schedule of functional expenses with the allocation methodology documented
- Fixed asset and depreciation schedules, with additions and disposals supported
- Payroll reconciliations tying the general ledger to quarterly filings
- Accounts payable and accrued liability detail with subsequent payment testing
- Board minutes, executed contracts, debt agreements, and lease documentation
- For federal awards: the schedule of expenditures of federal awards and supporting detail
Readiness
What ready actually looks like.
The schedules already exist
Because they were produced during the monthly close rather than assembled in the spring. The auditor request list is largely a matter of sending files that are already current.
Someone can answer the questions
Fieldwork questions go to a person who understands the accounting and can respond the same day, without routing through the Executive Director.
Last year is closed out
Prior-year findings and management letter comments were remediated during the year, deliberately, with evidence the auditors can see.
Nothing surprising turns up
The organization already knows about the awkward items, because they were identified and discussed internally rather than discovered during fieldwork.
Timing
When preparation should actually happen.
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Year round
Reconciliations, grant tracking, and net asset detail stay current as part of the close. This is the part that actually determines how the audit goes.
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Three to four months out
Review the prior-year request list and findings, confirm the engagement timeline with the auditors, and identify any accounting treatment that should be resolved before year end rather than during fieldwork.
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One to two months out
Close the year, assemble the schedules, reconcile supporting detail to the trial balance, and prepare draft statements and footnote support.
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During fieldwork
Respond to auditor requests directly, track open items, and keep the Executive Director out of the day-to-day back and forth.
Related reading: what your auditor is actually checking.
Related: grant and restricted fund accounting, which is where most audit findings originate, and the full scope of controller services.
Audit questions worth asking early.
- Can Truvio perform our audit?
- No, and no one who prepares your books can. The independent audit has to be performed by a firm that is independent of the accounting. Truvio prepares the organization for the audit and coordinates with your auditors, which is a different role and not a conflicting one.
- We have a single audit. Is that different?
- Yes, materially. Federal award spending above the threshold triggers Uniform Guidance requirements: the schedule of expenditures of federal awards, major program determination, and compliance testing across areas like allowable costs, period of performance, procurement, and reporting. Jeremy supported single audits as Controller of a sixty-five million dollar nonprofit healthcare organization with multiple federal funding streams.
- Our audit is in two months and we are behind. Is it too late?
- Not usually, though the scope changes. At that point the work is triage: close the year, build the schedules that matter most, and be candid with the auditors about timing. Organizations get through compressed preparation regularly. It is harder and more expensive than doing it across the year, which is the argument for changing the pattern afterward.
- Will this reduce what our audit costs?
- Often, though no one should promise a specific number. Audit fees rise when auditors have to build schedules, chase documentation, or re-perform reconciliations. Removing that work removes the hours that go with it. The more reliable benefit is that fieldwork stops consuming your staff.
- What if the same findings keep appearing?
- Repeat findings usually mean nobody owned remediation between audits, not that the problem is hard to fix. Truvio treats prior-year findings as scheduled work during the year, with evidence assembled as it goes, so the auditors can see what changed.
Talk with Jeremy
Fieldwork is on the calendar and you are not sure you are ready.
Tell us when the audit starts and where the books stand. You will get an honest assessment of what can be done in the time available and what should change before next year.