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EOFY planning accounting checklist


EOFY wooden blocks word

It’s hard to believe that the end of the financial year (EOFY) is almost upon us again! The past twelve months have flown by and we know that many not for profit organisations are still feeling the financial impact of the global pandemic.

Even without the challenges we’ve faced though 2020 and 2021, EOFY tends to be a stressful time, as there are more deadlines than usual and a real peak of work for the finance team.

To help you navigate the upcoming audit period, we’ve put together an accounting checklist and workflow recommendations that will hopefully relieve some of the pressure and keep you feeling on top of your task load.

Professional woman checking the invoice from her computer while writing on a paper with a calculator beside her

Start planning now


Recommendation number one is to begin planning now. You don’t have to wait until June is over to start getting your accounts in order. Allocate time in your calendar throughout the month to action specific tasks and to meet with key stakeholders, if necessary.

If you have any annual leave scheduled, consider moving it if it clashes with critical deadlines or will affect your ability to complete something on time… the last thing you want is to be stressing about your balance sheet when you are trying to relax on holiday.

You should also aim to have your bank accounts completely reconciled prior to any meetings to make sure you have the most up to date information at hand.

Balance sheet reconciliation


Your balance sheet reconciliations can be tackled in sections: bank accounts and petty cash, debtors, asset register and depreciation, other assets, and then payroll-related, income in advance, leases and other liabilities.

Hand of a man holding a pen while using a calculator in computing

Bank accounts and petty cash

Bank reconciliation is a primary focus, as it will help quickly identify any discrepancies or missing documents. Running your reconciliation report with your live bank feed enables you to have immediate visibility of outstanding transactions. You should also verify your accounting system balances against the bank-issued statements to guard against any missing data or errors in the bank feeds.

Bank reconciliation is absolutely key – there is little point continuing with your other reconciliations if your bank accounts don’t reconcile. It is best practice to reconcile every bank account every month – any investigation will be much more efficient if you only have the last month to query rather than the whole financial year.

Your petty cash balance should also be visible within your accounting system. If you have utilised petty cash during the last accounting period, then you need to make sure it is correctly represented, including the relevant paperwork – make sure you save a digital copy of receipts against each transaction.

Debtors

Check the details of your aged debtors. If they are more than two or three months old, you will need to understand the likelihood of receiving payment and potentially make a provision for bad debts, if you’re not confident. Xero has an automatic reminder function – you can automatically remind your overdue customers by email at whatever frequency you choose. But even with automated emails in place, June is the time to get on the phone and have a conversation with those older debtors, and especially any owing larger amounts.

Asset register and depreciation

If you are using Xero, asset management is simple, because the fixed asset register calculates depreciation for you. This tool makes the process far less time consuming and complicated than in the past.

You should also check whether you received any income from asset sales or whether you acquired any new assets and update the register with this information.

Assets word pasted on a folder

Other assets

It’s important that the details of your other current assets are up to date. Any accrued income should be an accurate reflection of funds due to you for work performed in the financial year. If you have accrued income older than three months, when do you expect to receive the funds? FY20 was the latest an entity could implement the new standard AASB15 Revenue, so your auditor should have made any adjustments or approved your treatment of income last year. Now would be a good time to check that you have implemented the changes throughout the financial year to avoid any surprise audit adjustments this year.

You need to also review your prepayment schedule… any insurance or other subscription based service that is paid annually should be taken into consideration.

Maintaining accurate stock on hand data will help with EOFY processes – if you haven’t done a mid-point stocktake you may as well wait until 30 June to get your final figures for the year. That said, if you are not confident about the accuracy of your inventory records, we recommend that you try to make some time during June to address any particularly messy or old items. Writing off old stock items now will give you less to count on 30 June!

Payroll related liabilities

You must make sure you have adequate provisions for employee entitlements. Leave accruals should include on-costs: superannuation, workers compensation insurance and any relevant leave loadings. For long service leave, check staff anniversary dates and make sure the probability rate is up to date – and remember that both long-term and short-term liabilities need to be correctly recognised.

Check your clearing accounts and determine when payments will clear any outstanding balance. These include PAYG, superannuation, wages payable and salary sacrifice payable. Make sure the accounts have been clearing to a nil balance routinely and that you don’t have anything lurking around that doesn’t belong there.

Hand of a person calculating the invoice in the ledger

Income in advance

Current liabilities are an important component of your balance sheet to review – errors here could result in misstatement of income and expenses on your Profit and Loss, skewing the result for the year.

Start with income in advance. This is critical to ensuring that income is stated correctly in the Profit and Loss. You should understand the income drawdown plan for any new funding you have received – are you drawing down by budget, is it spread across 12 months or are you matching the individual expenses?

If the funding is spread across 12 months, you need to make sure the monthly amount has been adjusted for CPI increases and if you received an equal remuneration order (ERO) payment.

Leases and other liabilities

Other liabilities to review include your accrued expenses… these should be reversed if they have been paid and updated in your accounting system. Reconcile your GST account and check your ATO integrated account – use the June BAS lodgement to action any adjustments.

One of the big ticket changes in FY20 was AASB16 Leases. As with revenue recognition, you and your auditor should have come to an agreement of how you will treat recognition of your lease liabilities during last year’s audit. Hopefully, they will have provided you with a worksheet so that you can run the calculations yourself going forward – if not, ask them for it.

Financial business sheet and calculator

Profit and loss analysis


Once the balance sheet is tidy you can move on to the Profit and Loss, confident that all income and expenses have been recognised.

Running a Profit and Loss report comparing programs or cost centres enables you to identify any unassigned transactions and to sense-check the allocations between cost centres. Make sure that any shared costs have been assigned to programs, including management fees or allocation of management salaries – programs don’t run themselves!

You should also run the P&L comparing previous months so that you can review and verify any irregular income or expenses… for example, if rent costs doubled this month, find out why.

Maybe an event produced a higher profit than usual; did you allocate all the related costs? Any kinks you can iron out now will make for a smoother audit preparation process after 30 June.

Not for profit accounting experts


Our team of not for profit accounting specialists understands the complexity of the NFP sector. We have over 20 years of experience working in the non-profit sector and know exactly how to support you through end of financial year challenges.

We are here to help. If you have any questions, please contact us today. Read more not for profit accounting articles.

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