You Can Win the Fiscal Year-End Marathon, and Here’s How

This is a guest post by Annice Reed and Sandi Matthews

June 30 is a popular fiscal year-end for nonprofits. If you are among them, you may be feeling stressed right now. But here is a little secret gleaned from our combined 25+ years of experience as nonprofit controllers. You can condition yourself to be stress-free at year-end. Yes, it can be done! Here’s how: You will need the determination of a marathon runner.

Do you have what it takes to go the distance?

1. Advance preparation is crucial. Athletes know they cannot go from zero to 26 miles without conditioning, or else they put themselves at risk of severe injury. In the same way, advance preparation is key to a successful, low drama audit. One controller we know admits to waiting until a week before the auditors came on site to prepare the requested schedules. Does this sound familiar to you? At best, scrambling at the last minute causes unneeded stress, as you have no contingency built-in whatsoever for unexpected issues. At worst, you risk being underprepared, and the potential unanticipated audit fees can harm your organization’s budget and your credibility. Keep in mind that the more lead schedules you can update during the year, the less you have to do at year-end. For example, prepaid expenses, depreciation and amortization schedules can usually be updated each month. Procrastinate at your own risk, but don’t say we didn’t warn you!
2. Track your progress. Many athletes use Fitbits or other devices to help track their progress towards fitness goals. Similarly, you can use analytics to monitor and analyze your organization’s financial health. Track flux information–for example, changes in your account balances, financial reports, budgets and so on. Investigate when something seems amiss, and proactively resolve issues, such as misstatements or systematic errors. Monitor and investigate fluctuations in account balances, and you will be ready to answer your auditors when the times comes.
3. Get psyched up! The most successful athletes keep their energy levels high. Accounting managers: remember that your staff takes cues from you. If you are positive, chances are your staff will feel that way, too. But complain and they, too, are more likely to feel angst about the impending audit. There is no harm in keeping things light, for example, by celebrating the beginning of the new fiscal year as an opportunity to tidy your records and start fresh. Why not get your whole organization involved in a New Year office party? You don’t have to spend much; even if you just serve cookies and hand out “Happy New Year” party favors (which can be purchased on clearance in January), that goes a long way in keeping spirits high. In our experience, this can help rally staff to show support for your accounting team.
4. Build a strong relationship with your external CPA or accounting firm. Experienced marathon runners know they need proper footwear, so they turn to professional shoe stores, which can measure the width and the arch of the foot and guide them to a shoe that best fits. Like a runner, you can invest time in cultivating a good working relationship with your firm. Don’t hesitate to ask questions. We recommend that you put a reminder on your calendar to email your auditors regarding anything that might affect the audit, perhaps once a quarter (think: major transactions, new accounting standards, amendments to organizational bylaws, and so on). Additionally, this is an opportunity to send your auditors copies of documents and contracts, which they will need for their files anyway come audit time. Keeping them updated will save you time. Plus, your auditors will love you for it!
5. If you foresee a problem, take action. What does an athlete do if they roll their ankle? It would be foolish to “push through” the pain without having it checked out, right? Running on a potentially sprained ankle puts you at risk of further injury. Similarly, if there is anything that could affect your ability to deliver audit schedules on time, let your accounting firm know as soon as possible. Most likely, your auditor can help you find a workaround solution. Do this right away, as soon as you foresee a potential issue.
6. Make preparing for the audit part of your mindset, not just today, but every day. Athletes learn to adopt a routine, and they avoid wavering from it. They ignore the temptation to skip their normal 5:30 am workout just this once because one slip can lead to another slip, and a series of slips becomes a bad habit. In that spirit, we accountants can treat every day as if the audit were tomorrow. For example, if the supporting documentation is not clear enough, do not post the entry and put it on your “to-do” list of things to document later, because chances are you may forget. Document issues as they arise when it’s fresh in your mind. Also, get the fully executed copies of new agreements when signed–for example, leases, contracts, CD renewals, and so on, and save an electronic copy in a file specifically for the annual audit. Do this even if it means saving it twice. This can be an incredible time saver at year-end. When the auditors are onsite is not the time to be rooting through your desk for the finalized, signed version of the contract.
7. Don’t forget self-care. Athletes take recovery days. They take care of their minds and bodies to avoid burnout. We accountants are more prone to making errors, both accounting errors and errors in personal judgment, when we are not taking care of ourselves. To stay mentally healthy, visualize yourself crossing the finish line, and try to cultivate a sense of gratitude towards those supporting your effort.

Remember: Finishing a marathon is no easy feat, no matter what your time. So don’t forget to enjoy your success as you cross the finish line. If you follow our tips, you will stay positive, learn from past mistakes, and make next year’s audit even better than the last, continuing that positive momentum you have created.

About the Authors

Annice Reed, CPA, MBA, Controller for North Texas State Soccer. Annice specializes in not-for-profit accounting, taxes and consulting and has over 20 years of experience. North Texas State Soccer is a not-for-profit organization that offers soccer programs for over 165,000 youth and adults in that region. Annice volunteers for the AICPA’s Not-for-Profit Resource Group.

Sandi Matthews, CPA, CGMA, Manager, American Institute of Certified Public Accountants (AICPA). Sandi manages the AICPA’s Not-for-Profit Section, a community for not-for-profit financial professionals and their business advisors. Prior to joining AICPA, Sandi was Controller for North Carolina Community Foundation, a not-for-profit grantmaking organization with over $200 million in assets providing local resource allocation to support vital causes and scholarships across North Carolina.

Meet Sandi at bbcon! Her presentation, “The Nonprofit Controller:  Shifting from Gatekeeper to Enabler” is the must-attend session for financial managers.  Register for bbcon here!