While students and teachers enjoy their break, school financial officers can use this time to prepare for the upcoming audit season. Ensuring your school’s financials are in order now can prevent stress later. Here’s a guide to keep your audit prep cool and collected.

1. Set the Syllabus with Your Auditors

Schedule a meeting with your auditors to discuss the upcoming audit. This conversation clarifies expectations, identifies changes in audit procedures or new standards, and ensures you understand any new documentation requirements. The auditors’ Provided by Client (PBC) request list acts as the syllabus for ensuring a smooth, stress-free audit process.

2. Start Fresh with the Basics

Begin with the basics: ensure your beginning balances match the ending balances from last year’s audit. If they don’t, audit adjustments may have been missed. Think of this step as reviewing last year’s final report card to make sure all the grades are accurate and up-to-date.

3. Balance Your (Check)Books

Bring your bank and investment reconciliations up to date. Document and explain any reconciling items. This foundational step is crucial to maintaining your school’s financial health.

4. Grade Your Receivables

Before auditors arrive, assess the collectability of your receivables. Is your allowance adequate? Are you in compliance with CECL? It’s like checking homework before the teacher grades it.

5. Don’t Miss Assignments

Accruals are like homework assignments – you can’t afford to overlook them. Ensure your payroll and PTO accruals are accurate through the end of the year. Monitor post-year-end invoices and cash disbursements to ensure expenses are in the correct period.

6. Track Your School Supplies

Ensure no fixed assets are mistakenly categorized as repair and maintenance expense or supplies. Have supporting documentation ready for capitalized items. This diligence helps avoid misclassification and ensures your asset records are accurate.

7. Spot the Differences

Compare account balances year over year and investigate any significant variances (10% or more) to identify and correct errors before the auditors do. It’s like catching a mistake on a test before submitting it.

8. Gather Your Study Materials

Gather essential documents for the audit. This includes board meeting minutes, handbooks, policies and procedures manuals, conflicts of interest statements, and related party disclosures. Being prepared ensures you’re ready when auditors request them.

9. An Audit is a Group Project

Using the PBC request list, create a checklist with responsible staff members and due dates. Share this with your team and establish a central repository for all requested items. An organized approach ensures nothing falls through the cracks.

10. Stay Audit Ready Year-Round

Build a monthly close checklist incorporating the steps above to ensure audit readiness isn’t a last-minute scramble. This proactive approach makes audit prep a breeze and allows you to enjoy the summer break without the looming stress of an impending audit.

11. Optimize Your Summer for Audit Success

While the kids enjoy their vacation, take this time to get audit-ready and keep your school’s finances in top shape. Your audit readiness sets a strong foundation for a smooth and successful academic year ahead.

At YPTC, we’re dedicated to helping Independent Schools get audit-ready. Contact us to learn more!

Independent Schools Specialization – Your Part-Time Controller, LLC (yptc.com)