Grab your sunglasses, fuel up the car, and get ready for an end-of-year reporting road trip.
Beyond reflecting on past fiscal year performance, EOY reports are the roadmap your organization should follow to shape organizational growth, funding, and mission delivery in the upcoming year.
Effectively closing the books—whether on a year-end or a fiscal year cycle—is vital to both your internal accounting processes and external reporting to constituents.
EOY fiscal statements need to be accurate to provide a clear picture of financial performance and provide transparent results to stakeholders. They should include metrics that demonstrate effectiveness. EOY reports will also be the foundation of your annual report, so ensuring they’re complete and accurate is key.
Here are five things you should do in conjunction with EOY reports:
1. Reconcile cash and balance sheet accounts
The key to your EOY fiscal report is to reconcile cash on hand and balance all accounts. Organizations must have adequate documentation for all affiliated accounts, proper depreciation, accrual schedules, and any other relevant fiscal information needed to uncover any potential accounting errors that may have been made.
It’s crucial to review funding commitments and contracts during this time to reconcile expenses reported and pay/collect any outstanding contract or agreement balances.
2. Perform a break-even analysis
This calculation weighs the costs of a service or product against the selling price to determine the point at which you will break even. This analysis should look at each funding source, program, and department to determine financial performance and show where resources are being generated and applied.
Break-even analysis results will vary by department. In some departments, income will tower above costs, whereas it will be the other way around in different departments. However, the break-even report provides a comprehensive and transparent view of how a nonprofit utilizes its resources.
3. Reconcile actuals to budget for grants and federal awards
Grants are essential for the health of nonprofits. If they misallocate funding or fail to show that the budget went to its intended use, grantors will move on and potentially reallocate to another suitable organization.
Nonprofits must show how they’re spending grant money and that they are spending all the money allocated for each year to maintain good relations with grantors and regulatory parties. Accurate schedules show that an organization is spending money at the proper cadence and is on pace to allocate future funds properly—a look-back analysis details how grant dollars connect directly to their designated or undesignated program activities.
4. Prepare a schedule for auditors
EOY reporting correlates with the beginning of audit seasoning. Any organization can prepare for a potential audit by preparing an audit schedule. Creating an auditor schedule helps an organization ensure its numbers correspond to the figures it reports to stakeholders and grantors. This report needs to include documentation of the organization’s balances and income, and must be supported by verifiable data.
The Nonprofit Audit Fundamentals Guide makes preparing for an audit simple. From pre- to post-audit the guide offers practical advice to ace your next audit.
5. Review previous reports for accuracy in your current report
One of the easiest ways an organization can ensure it has all the figures required in its report is to look back at last year’s annual report and create a checklist of financial figures to avoid inadvertently missing anything.
Organizations should resolve those issues if data is missing or incomplete before submitting a report to the board. Rely on the previous year’s financials for valuable benchmarking data to show growth to external stakeholders and occasionally grantors.
As you pass the checkered flag on this fiscal year, having accurate and transparent EOY reporting will enable new growth opportunities in the future.
