Spring Cleaning at Year-End for Not-for-Profit Organizations

By Matthew O. McDonald, CPA/CFF, CFE | Not-for-Profit Team

An organization’s “to-do list” is daunting when it comes to year-end, including tasks like finalizing the budget, preparing for the audit, having the tax returns prepared, reconciling all necessary accounts, preparing annual reports, and the list could go on…

A few suggested items to add to your list:

Vendor Maintenance
Make time to prepare a report that shows the aggregate payments to all of your vendors during the year.  As you prepare this report, make sure to include all vendors still active, even if no payments were sent.  Consider sorting the report in descending dollar amount for the year.  Circulate this report among the key officers of your company with the following tasks:

• Review amounts paid to each vendor. Are the total payments reasonable based on your knowledge of who the company does business with?
• Are there any vendors on the list that the company does not do any more business with?
• Are there unfamiliar vendors on the list to the officer?
• Without question, you will need to follow up on any exceptions that are noted through these reviews.

General Ledger Maintenance
Do you have general ledger accounts that are still active but no balances or transactions have occurred in them over the last year or two?  Consider deactivating those accounts to prevent accidental posting to those accounts in the future.  This may reduce the amount of account reconciliations you have to address in the future.

Records Maintenance
Once the year is closed, financial statements prepared, and tax returns are filed, why not consider cycling through your business records and discard what is not needed.  If you don’t have a document retention policy, please contact your Keiter representative, and we can share some recommended periods for frequently asked about items.  Just remember, keeping on top of these items keeps the task from becoming too daunting.

Update Conflict of Interest Representations
While Amy Menefee’s article last year discusses four activities to keep your organization fit, I propose updating conflict of interest representations as a fifth item for consideration.  The change of an entity’s year generally comes with change in some board members.  Make sure this activity is included annually on your Board’s agenda.  The activity should include distributing copies of the Organization’s policy and obtaining signed representations from each Board member on their familiarity of the policy and any existing conflicts for the member.

Ideally, not-for-profit leadership should review these areas on an annual basis. The Keiter Not-for-Profit team would be happy to discuss any of these best practices in more detail should you want more information. Contact your Keiter representative or 804.747.0000 | email.