For many churches and nonprofits, the word “audit” can bring anxiety but it doesn’t have to. When your books are in order and your documentation is complete, your annual audit can become a routine milestone rather than a source of dread.
In fact, preparing for your audit throughout the year not only improves your experience with external auditors, it also strengthens your organization’s internal accountability, transparency, and long-term sustainability.
Here’s a simple, proactive approach to audit readiness that we recommend to every client:
Reconcile Your Accounts Monthly
Regular bank and credit card reconciliations ensure that your books reflect reality. Small discrepancies are easier to spot and resolve when you're looking at them monthly, not months later in a panic!
Bonus: Monthly reconciliations also protect against fraud and financial misstatements, which is something your auditor is watching closely.
Digitize Your Documentation
Storing physical receipts and handwritten notes might have worked 15 years ago, but digital storage is the gold standard today. Keep organized, labeled folders for:
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Receipts and vendor invoices
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Payroll records
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Board meeting minutes
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Grant agreements and donor communications
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Contracts, leases, and policies
Cloud-based systems like Google Drive, Dropbox, or SharePoint are helpful when multiple staff or board members need access.
Keep Your Chart of Accounts Clean
A cluttered or inconsistent chart of accounts can create confusion for both your staff and your auditor. Make sure your categories:
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Reflect your actual operations
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Aren’t duplicated or unused
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Include consistent naming conventions
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Are properly mapped to functional expenses (program, admin, fundraising)
Anchor Hill Tip: Do an annual chart review each January so your accounts stay relevant and audit-friendly (see example to the left).
Track Grants, Restricted Funds & Fixed Assets
Auditors will look for evidence of how you’ve used designated funds, especially if they come from government grants, foundations, or large donors. Maintain:
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A running balance for each restricted fund
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Grant compliance reports and timelines
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An up-to-date fixed asset register (with depreciation schedules, if applicable)
Let Anchor Hill Help You Stay Audit-Ready All Year
We work with our clients all year long to maintain clean books, well-organized documentation, and accurate reporting, so audit time isn’t a scramble.
With our support, you’ll be able to:
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Provide your auditor with everything they need, right from the start
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Answer questions confidently
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Strengthen trust with your board and donors
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Focus on ministry and mission, not paperwork and panic!
Audit-ready doesn’t have to mean audit-stressed. Let Anchor Hill Accounting help you get there and stay there.