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Preparing for EOFY? Here are five steps to do before June
Accountants for not-for-profit organisations have a crucial role to play in making sure the organisation’s finances are in order when the EOFY rolls around each June.
This can be a complex task, particularly for those who don’t have an accounting background.
There is a lot to cover: knowing where to begin, which regulatory requirements might have changed and now require updates, reports that you need to run and all the details in between.
So we’ve compiled a list of the five most important steps to take to help you prepare for EOFY.
Step 1: Make time to plan
It’s never too early to start planning. The June deadline always feels far away, but it comes around quickly. Having a plan as early as April will help you get ahead – and stay there.
Begin blocking out time in your calendar once or twice a week. Ask your auditor for their requirements list, or if they can’t provide it now, hunt out last year’s list, and use that to guide you in your preparations.
Also, if you’ll require any input from external stakeholders, start reaching out to them to organise a handover of any information you’ll need and avoid any rushed last-minute meetings.
Step 2: Get your accounts up to date
Staying on top of your account reconciliations is a great way to avoid an avalanche at the EOFY. So if you’ve been doing that routinely throughout the year, then your EOFY reconciliations shouldn’t be overly challenging.
However, it’s still good practice to go back through and review your accounts to make sure you have allocated everything correctly. This helps you capture any outstanding transactions or discrepancies and clear them appropriately before the end of June, as well as capture anything that might’ve slipped through the cracks.
What needs to be on your balance sheet reconciliation? Think of key items like:
- Bank accounts, investments and term deposits and petty cash
- Debtors
- Assets and depreciation
- Payroll related liabilities
- Income in advance
- Leases and other liabilities
You can get a more detailed overview of each of these items in our EOFY planning accounting checklist.
Step 3: Organise your payroll and super contributions
For organisations with employees, it’s important to ensure that all payroll records are accurate and up to date. This includes reviewing employee records, ensuring correct payment of wages and entitlements, and reconciling the payroll accounts.
You only have until 14 July to finalise payroll for the tax year ending 30 June, so some early spot checks can help you get across the line. The payroll compliance deadline applies to all employers, not just those with a 30 June financial year end, and you can make a start on finalising via Single Touch Payroll as soon as your last June payroll is complete.
As employers, you’re also responsible for payment of superannuation contributions. So don’t neglect to review all contributions made throughout the financial year for each employee (even those who might’ve moved on). One of the first things your auditor will check is that the superannuation expense is correct.
Auditors will also be keen to check that leave accruals are accurate, so don’t forget to gross them up for superannuation and the new year’s wages rates. And a reminder on Long Service Leave – as most auditors will want to see it calculated on a ‘probability basis’ – make sure that you complete your calculations and can justify the liability held on the balance sheet, which will almost certainly be different to the amount generated by your payroll system.
Step 4: Understand compliance requirements
There are different requirements for ACNC-registered charities, depending on the annual revenue of each organisation.
Medium to large charities and NFP organisations with an annual revenue of over $500,000 must provide both an Annual Information Statement and an annual financial report to the ACNC within six months of the EOFY.
The requirements for these reports are different for smaller organisations under the $500,000 cap; these organisations only need to submit the Annual Information Statement.
However, they can submit an annual financial report if they choose to.
Additionally, you should review any grant funding and donor contributions received throughout the financial year to make sure they’re recorded and spent correctly, and that you understand your reporting requirements to the funder.
During the financial year, it is especially important to ensure that you have maximised any unspent funds that you must return in line with your funding agreement. You should monitor this routinely throughout the year – a Profit & Loss report against budget is essential – but now is the time to pay close attention as the end of the funding period draws to an end.
Make sure you understand the various funding periods – not all align neatly with a financial year and you don’t want to burn through your cash to spend it by 30 June then find your funding for activities runs through to 30 September!
Step 5: Review the upcoming budget
Your FY23 performance will provide some guidance for your FY24 budget. Complementing your EOFY preparation by reviewing the upcoming financial year can give you a healthy overview of what to expect in the coming months, and vice versa.
What income and expenses can you expect, and when? What are the cash flow projections? Are there any areas of concern that you need to address, such as low funds or cash flow problems?
It also gives you the chance to make sure that the new year’s budget allocations and resources support your organisation’s strategic objectives and can kick-start planning for any major fundraising events or grant application deadlines.
Next steps
EOFY is a busy time for anyone working in finance. Planning ahead puts you in good stead to successfully close off the financial year and set yourself and your organisation up properly for the next one.
Contact us today to find out how our accounting services can assist you.
