Pre-Audit Planning: How to Simplify Year-End Reporting
Year-end reporting, the dreaded time of year where you need to find all the receipts, contracts, and funds from throughout the year. While most non-profit organizations often struggle with their financial data, there are ways to improve your year-end reporting processes. One excellent solution is to use Blackbaud Financial Edge NXT® to centralize, organize, and share your financial information securely with stakeholders and auditors.
In this article, we explain why year-end reporting is often so difficult, how to simplify it, and how Financial Edge NXT can help.
Why is Year-End Reporting So Stressful for Nonprofits?
Unlike for-profit organizations, non-profits struggle with a few key aspects of preparing for an audit or creating a major report.
Firstly, many non-profits struggle with disorganized financial data. As they manage donations, grants, sponsorships, and restricted funds, the different funding streams may not all be visible in one system. This lack of transparency makes reconciliation difficult and increases the time needed for reporting.
Many smaller non-profits manage all of their financial information using manual processes. Managing income and expenses in spreadsheets or outdated, complex systems increases the risk of mistakes, incorrect data, and missing information. During your end-of-year reporting, these all add time and effort to an already stressful process.
Another common problem is tracking compliance. Some donors will give restricted funds or have certain conditions attached to their grants, complicating reporting. These should be correctly flagged as the IRS pays special attention to them.
Last but not least, the majority of non-profits struggle with limited internal resources. Small teams and tight budgets increase the stress and pressure on the person who manages the finances and creates the report.
How Pre-Audit Planning Makes Year-End Easier for Nonprofits
Rather than leaving the whole audit process for the end of the year or even the new year, prepare your audit early. Pre-audit planning helps you organize financial data, ensure grant and donor requirements compliance, and efficiently prepare accurate reports.
In your year-end audit planning, you should identify and save all the documentation you’ll need, including financial reports, income statements, proof of expenses, contracts, and inventories.
If needed, you can collect all the paper files together or download them from your different systems. However, ideally, you’ll use Financial Edge NXT help you.
How Financial Edge NXT Simplifies Your Pre-Audit Planning
Blackbaud Financial Edge NXT® is an excellent tool for supporting you throughout the year. It boosts accountability and transparency and simplifies understanding of your non-profit’s finances. But before and during your audit season, it is a lifesaver.
1 - Centralized Financial Management
The first benefit of Financial Edge NXT is that it centralizes all your financial data in one place. So you can see all your donor and grant information together, making it quick and easy to pull the information you need for your audit.
2 - Automated Fund Accounting
It also seamlessly tracks both unrestricted and restricted funds, net asset balances across different records, and restricted fund releases. Thus, you never have to create manual workarounds or stress about complying with restricted funds requirements; the software does it for you.
3 - Pre-Built Audit-Ready Reports
Financial Edge NXT provides report templates, pre-built dashboards, and standardized report types, making it easy to generate detailed financial statements tailored to non-profits. It also handles compliance and report-building, saving you time and effort.
4 - Error Reduction Through Automation
Rather than risking small mistakes and human error in your financial information and data entry, Financial Edge NXT has automated workflows. This automated process improves your team's accuracy and efficiency.
5 - Real-Time Collaboration
Lastly, you can also give your auditor view-only access to your system so they can efficiently find all the information they need. Rather than downloading information and saving it in a folder, which is a waste of your valuable time, share system access securely so your auditor can find everything in a centralized location.
Watch their 60-minute webinar on Blackbaud’s fund accounting software.
NPact and Financial Edge NXT: Your Partners in Simplifying Reporting
NPact is an official Financial Edge NXT partner. We provide consulting, training, and database management services to non-profit organizations across the United States and Canada.
We can help you prepare for your financial audits year-round to ensure that your financial management system is accurate, clean, and easy to use. Contact us to learn more about our offerings.
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