As spring approaches, non-profits across the country are gearing up for one of the most important times of the financial year: audit season.
This period is marked by full financial audits, internal monitoring, financial reviews, and the preparation of Form 990 tax returns, which are due in May. Compliance is not only critical for maintaining tax-exempt status but also for reinforcing transparency and donor trust.
Why Non-Profit Financial Audits Matter
Maintaining financial integrity for non-profits is paramount.
Regular audits not only help organizations identify and correct financial discrepancies but also instill confidence in stakeholders.
A full financial audit involves an independent CPA firm reviewing the organization’s financial statements to verify accuracy and compliance with Generally Accepted Accounting Principles (GAAP). Additionally, audits provide insight into financial management practices, helping non-profits refine budgeting and strategic planning.
A financial audit can:
Affirm financial transparency for donors, grantors, and board members.
Identify errors, inconsistencies, or financial risks before they become serious problems.
Strengthen internal controls to prevent fraud and mismanagement.
Provide credibility when applying for grants or seeking large-scale donations.
Even if a full audit isn’t required, many organizations opt for financial reviews or monitoring to make sure their books are in order and internal policies are being followed.
Preparing for the 990 Tax Return Deadline
This tax document serves as both a financial statement and a public disclosure tool, allowing donors, funders, and regulators to see how the organization manages its funds.
There are several versions of Form 990, including:
Form 990-N (for small organizations with revenue under $50,000).
Form 990-EZ (for mid-sized non-profits with revenue under $200,000).
Form 990 (for large organizations with revenue above $200,000).
Failure to file Form 990 on time can lead to penalties and loss of tax-exempt status, making timely preparation a top priority.
Steps for a Smooth Audit and Filing Process
To avoid last-minute stress, non-profits should follow these steps:
Organize financial records – Verify that all income, donations, expenses, and grants are properly recorded.
Review financial statements – Cross-check balance sheets, income statements, and cash flow reports for accuracy.
Update internal policies – Strengthen financial controls to prevent discrepancies or fraud.
Work with an accountant or auditor – A CPA can help navigate compliance issues and prepare Form 990 correctly.
Plan ahead – Start early to avoid delays and last-minute surprises.
Audit season and tax filing can seem overwhelming, but with proper preparation and oversight, non-profits can stay compliant, financially strong, and transparent. Proactively addressing financial concerns throughout the year can further ease the burden when audit season arrives.
About Real Finance Group
Real Finance Group LLC is a resolute and full-service accounting firm, dedicated to empowering Business Owners and Non-Profits by optimizing their financial operations. Our expertise lies in refining accounting structures to ensure the delivery of precise financial data, which is crucial for informed decision-making. We are committed to providing personalized accounting solutions with a focus on efficiency and accuracy, tailored specifically to meet the distinct needs of each client.
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