How to Get Ready for the Annual Audit?

DO

• Use the following checklist. Make sure that any adjustments to the financial statements occur BEFORE year end.


• Ensure ALL documents are provided at the time of audit.


• Let the auditor know of significant financial events, including those that occur in the following year (e.g. special assessments, loan, insurance settlements, significant bad debt write-offs).


• Understand that these are the Association’s financial statements and not ours. YOU own them…not us.

DON’T

• Make adjustments AFTER giving the auditor the financial statements.


• Expect the auditor to “fix” account balances or reconcile accounts. To maintain independence the auditor cannot be the bookkeeper.

 

Year-End Checklist
_______________________________ Association ______________ FYE

□   Provide Requested Audit Documents

□ See Audit-Records Request List in forms section of website.

□ Cash

□ Provide statements or printouts for every cash and investment account as of the end of the year – including certificates of deposit.
□ Research any old (> 90 days), outstanding items on bank reconciliation and resolve or make note of pending resolution.

□ A/R (Assessments Receivable)

□ Ensure that A/R aging report and Prepaid A/R report agree with balance sheet.
□ If on cash basis, provide a roll-forward by month of the activity that agrees with the AR aging reports.
□ Write off any uncollectible accounts, provide bad debt allowance estimates and/or indicate collection status for old/large $$ accounts.

□ Other Balance Sheet Accounts

□ If amortizing prepaid insurance, provide amortization schedule.
□ Ensure that AP report (Accounts Payable) report agrees with balance sheet.
□ Provide documentation for any other asset or liability (e.g. Deposits). With board approval, write off any amount that cannot be documented or reconciled.

□ Members Equity/ Operating Fund Balance

• □ Ensure that beginning members’ equity agrees with prior year audit if auditor’s adjusting entries were booked or that member’s equity has not changed since prior year if auditor’s adjusting journal entries not booked.
• □ Segregate any other adjustments to equity into a “Prior Period” account and provide documentation of those adjustments.

□ Replacement Fund/Reserves

• □ Reconcile fund balance with reserve cash.
• □ If amounts are Due Between Funds, document repayment plan.
• □ If not using fund accounting, segregate reserve expenses.

□ Income/Expense Statement

• □ Ensure assessments agree with budget and/or phasing schedule 
If phasing, provide schedule that agrees with general ledger
• □ Provide documentation for any special assessments, plus reconciliation of special assessment income, and associated expenses
• □ If there is payroll, reconcile to quarterly and annual reports. Provide those reports and reconciliation for audit
• □ Explain large budget to actual variances in income and expenses

□ Other

• □ Provide documentation and reconciliations for insurance claims
• □ Provide documentation and reconciliations for settlement activity
• □ Provide documentation and reconciliations for loans