Helping you prosper
As your charity approaches its year-end, thoughts naturally turn to the audit. For finance teams and trustees, this period can feel like a scramble against the clock, chasing paperwork, reconciling balances and briefing team members who may be new to the process. A well-prepared audit, however, does not have to be stressful.
Taking a structured approach in the weeks before can transform the experience from a source of pressure into a straightforward check of the year's work. Below, we set out ten practical steps charities and not-for-profits can take now to prepare for a smooth and efficient audit.
Why is this important?
An audit-ready charity is a sign of strong financial governance, something increasingly scrutinised by funders, regulators and the public. Charities operate in an environment of tight resources and high accountability, and trustees carry personal responsibility for ensuring the accounts give a true and fair view.
Poor preparation tends to lengthen the audit, increase costs and divert staff time away from the charity's core work at a time when resources are already stretched. It can also delay the filing of accounts, which affects a charity's standing with the Charity Commission, funders and other stakeholders.
Good preparation keeps the audit focused on genuine judgement areas rather than basic data-gathering. It builds trust with auditors, funders and trustees, and it frees the finance team to spend more time on the activities that support the charity's mission. The ten tips below aim to help you get there.
Our ten practical tips
1. Reconcile control accounts
Ensure your cash, debtors, creditors and payroll balances are up to date and match the supporting records. Follow up any old or unusual balances, check for things like debit balances on creditors and remember to translate any foreign currency balances using the year-end exchange rate.
2. Check cut-off
Review transactions around the year end to make sure income and expenditure are recorded in the right period. Check bank transactions and significant invoices, and look back at last year's accruals and prepayments to spot anything that may have been missed.
3. Review income recognition
Review significant grant agreements to identify any performance-related conditions and ensure income is recognised in the right period. Check for any funding restrictions and accrue legacy income where entitlement has been established.
4. Check your reserves
Review restricted and unrestricted reserves against the charity's funding and working capital needs. Focus on free reserves by excluding tangible fixed assets and other funds not readily available for spending.
5. Consider going concern
Make sure your budgets and cashflow forecasts are up to date and cover at least 12 months from when you expect to sign the accounts. Be ready to explain any significant movements from last year, and ensure your forecasts take account of inflation and changes to employment taxes.
6. Draft the trustees’ report
Use last year's report as a starting point and update it for the current year. We provide more guidance on the trustees’ annual report under SORP 2026 here, which you may find helpful.
7. Prepare the disclosures
Draft key disclosures, including related party transactions, staff costs, trustee and KMP remuneration, funds, post balance-sheet events and going concern, before the audit starts. Keep supporting working papers to hand for auditor review.
8. Produce an audit file
Include a contents page, cross-referenced to supporting subfolders for each line in the accounts, from fixed assets to funds, as well as the disclosure notes.
9. Schedule resource
Make sure everyone knows their role during the audit, from answering queries to hosting the auditors. Get the wider team involved, from credit control to HR. Set aside enough time, and have a suitable workspace and Wi‑Fi ready for any onsite visits.
10. Brace yourself
While audits can be demanding, good preparation helps things run smoothly, reduces disruption and can even help keep costs down. Don't forget to keep the biscuit tin stocked. It will not reduce audit testing, but it might make the process a little sweeter for everyone involved!
The next step
For more guidance on how you can get your charity and NFP audit ready, please get in touch with Grace Pay or your usual UHY charity adviser.
