The annual fiscal audit, which for many businesses including Not-for-Profit organizations, can be a very stressful time, particularly for CEO’s, CFO’s and their accounting team. Generally, the fiscal year ends on June 30 and there are a series of procedures that must take place in order to close the books for the year.
Some of the main areas that must be heavily concentrated on because they are crucial to the completion of the accounting close cycle are:
- Accounts Payable-purchase orders have to be reviewed and closed out
- Accounts Receivables-review of aging reports and collectibility (bad debt write-off)
- Cash-All payments received should be posted
- Reconciliation-particularly the bank accounts and credit card statements
- Analysis-make sure that the trial balance is solid. General ledger accounts should be thoroughly analyzed and reviewed.
- Financial Statement-this is ultimately the core. The goal is to produce accurate reports
Systems, Structure & Staffing
I have been through annual fiscal audits with several not-for-profit organizations, primarily in the social service space. For one reason or the other, the engagement is often delayed as the CFO’s find themselves in the unpleasant position of being unprepared when the auditors show up.
When the books are not in order, the delays can also result in huge costs overrun. The goal is to always have schedules ready for when the auditors arrive. This keeps costs at a minimum.
What the organization does from July 1 thru June 30, in terms of operations, will determine the outcome of how smooth the year-end close will flow. Three key factors to hone in on are:
- Systems,
- Structure &
- Staffing
When these three factors are absent within the accounting and finance department, it creates all sorts of problems for management.
Accounting leaders such as Controllers, Directors or Chief Financial Officers, are generally tasked with or are responsible for implementing operating policies and procedures.
From the lowest level to the highest team member, there should be clear guidelines and structure to facilitate a smooth workflow.
Another key area that has a heavy impact is the type of systems, with regards to technology. If many of the day-to-day processes are highly manual or labor-intensive, that can be a huge problem.
Periodically, management will do well by assessing their systems to determine when upgrades may be needed. This can improve efficiency and lead to higher levels of productivity. The ultimate goal is to produce accurate and timely financial reports.
The third area that is really important is the human capital. Hiring and retaining adequate staff is paramount to the success of the organization. In some instances, there aren’t enough staff to perform all of the essential functions. In other instances, the staff lacks the level of skills needed and that adds to more inefficiencies.
While finding the perfect employee for a role can be quite challenging, it is important to hire wisely. Candidates for accounting positions should be vetted well, to ensure that they are well qualified.
Certain functions require specific knowledge and training; therefore, it is crucial that organizations do their due diligence. For example, a CPA designation may be best for a Chief Financial Officer position.
So, where is your firm in terms of systems, structure and staffing? The COVID-19 pandemic impacted companies globally. Remote working became the only option for many; therefore, those who were reluctant to use technology had to pivot really fast.
Another major issue derived from the pandemic was a huge labor shortage. Many were faced with challenges such as child-care or home-schooling their children. As a result, they quit their jobs. Primarily women.
If your company or organization is still dealing with staffing inadequacies that may impact your annual audit, you may want to draw from the services of a consultant. Temporary personnel can fill the gap in the short-term and are oftentimes less of a hassle to recruit.
For higher level roles, consider seeking an Outsource CFO service. There are many Certified Public Accountants (CPA’s) that provide this type of service on a consulting basis. Solutions are available to you.
SLS Accounting & Business Consulting Services offer accounting & bookkeeping services to entrepreneurs and small businesses, including not-for-profit organizations. We have been providing consulting services to various organizations, primarily non-profits, during their busy annual audit season. We will design strategies to close your books timely, accurately and seamlessly to deliver high outcomes.
You can schedule a free consultation. To learn more about us, please visit the website@ https://slsaccountingsvcs.com
SLS Accounting & Business Consulting Services 