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EOFY tips for not for profits
The end of the financial year (EOFY) is just around the corner and we know that this year has been unusual, to say the least.
With that in mind, we want to make sure you are well prepared for 30 June and the coming audit season.
We have compiled a selection of tips that will help you plan for year end and be in the best position to achieve a positive outcome for your organisation.
1. Up to date accounts
We often talk about the benefits of Xero’s cloud-based accounting… the ease and efficiency of its operations. At this time of year, the key thing to focus on is being up to date – making sure your accounts are reconciled is paramount in the lead up to 30 June. So if you’ve had a niggling out of balance amount in your accounts payable, for example, now is the time to dive into it and get it resolved.
Hopefully, you will have already been operating a thorough reconciliation process each month so you only have to deal with this month’s data rather than work your way through the whole 12 months.
Part of this process is also ensuring that any June invoices are accurately allocated. If they arrive in July but are for the June period, you need to make sure you record them correctly. Your auditor will definitely be on the lookout for this… so keep it in mind as the month rolls over.
2. Review your reports
We know that the last few months have been financially challenging for many of our clients. Fundraising has been put on hold and many services impacted. But even during all the disruption, it’s critical that you’ve continued to accurately manage your accounts.
If you’ve got grant funding, it’s important to know that you’ve expended the funds in line with your funding agreement and that you’ve recorded it all properly. Compare your profit and loss reports for your funded activities and make sure everything has been correctly allocated.
Review your Balance Sheet – have you fully drawn down any income in advance? We understand that some funders are taking a more flexible approach this year to unspent funds given the COVID-19 restrictions. If you have unspent funds at 30 June, make sure that you get written approval from your funder to roll over, and make that approval available to your auditor.
Pay particular attention to balances that haven’t changed since the end of last financial year – is it an account that you only adjust at year end? Or maybe it just slipped under the radar last year, making now a good time to write off the balance.
3. Check your payroll and superannuation contributions
As well as being EOFY for lots of organisations, it’s the end of tax year for everybody.
This means that 30 June is the payroll cut off. From 1 July 2019, all organisations should have been reporting directly to the ATO via the single touch payroll (STP) system.
This means there won’t be any payment summaries or EMPDUPE files to submit… but you will need to follow a formal finalisation process through your STP service. Within payroll you also need to make sure that leave balances are grossed up to include superannuation… your auditors will check this. They will also check that everyone has been receiving their 9.5% employer guaranteed super contributions.
Plus, it’s also important to know the relevant cut-off dates in order to make sure your superannuation contributions arrive in your employees’ accounts before the end of June.
4. Assess COVID-19 relief opportunities
Federal and state governments all announced a range of stimulus packages to support the not for profit sector during the COVID-19 pandemic. We outlined these measures in detail, but it is worthwhile reviewing again before the end of the financial year, to check whether you may have become eligible for additional support.
There’s an incentive to do your compliance lodgements early this year-end – lodgement of your June BAS will trigger the next round of cash flow boost funding and if your NFP association has payroll tax liabilities, you will have your annual payroll tax liability reduced by 25% after you lodge the annual reconciliation.
The Funding Centre has also prepared an extensive list of COVID-19 financial assistance options – including individual state and sector packages.
5. Annual general meeting preparation
Your annual general meeting (AGM) is an important regulatory obligation. It is likely that the date will have been set when your board meetings were planned for the year… so you should already have this in the calendar for later in 2020.
We recommend working backwards from the AGM date when you are planning your audit.
This ensures your auditor will have completed their work in time and the financial statements will be with the board to be signed comfortably in advance of the AGM deadline.
Being well prepared is the best way to make sure your auditor isn’t rushed for time. You don’t want them delivering signed papers in the middle of the AGM! True story, we’ve seen it happen…
6. Auditor checklist
Most auditors will provide you with a requirements checklist. Make sure you work through the list and prepare everything they are looking for… it’s an easy way to make the audit process flow smoothly and guarantee a good working relationship.
As a guide, they will want to see your board meeting minutes, your contracts, bank statements and supporting financial documents. It’s worthwhile setting up a secure online sharing platform so that you can easily share all the contract and other information needs. And with the financial documents that support transactions, attach them to the transaction within your accounting software… it will make it very easy for the auditors to find exactly what they need.
Our team of not for profit accounting specialists understands the complexity of the NFP sector and we are proud to have developed productive working relationships with many audit firms. We know what is required in the lead up to audit season, so if you have any questions, please contact us today.
Find out more about not for profit accounting. Read more not for profit accounting articles.
