Prepare Financial Statements

Although this may seem fairly obvious when you are considering your EOFY, there are a few actions you can put into place to ensure you are on top of things when your accountant requests your information:

Ensure all financial records, including income, expenses, assets and liabilities, are accurate and up to date. Of course, you’ve likely been working through the reconciliation process each month, so you should only have to deal with the latest transactions, rather than balancing the whole 12 months. However, double check your systems so you have compiled receipts, invoices and fully reconciled bank statements for auditing and reporting purposes. Ensuring accurate records prevents errors from compounding over time and builds a solid foundation for reporting.

Be aware of any recurring payments, prepayments and accrual of expenses and income, so you can align financial transactions to their correct reporting period. This is particularly relevant if you are including grants that span more than one reporting period. This should also include payroll leave accruals, (accruing the payroll expense if a pay period spans the 31st December, as well as general annual expenses, such as insurance.

Review and compare your profit and loss reports for your grant-funded activities and make sure everything has been allocated to the correct activity or project. Prepare acquittal statements for grants, with details of the funding spent on the activity. This is not only relevant to keep you accountable and up to date, but will also build trust with the grant providers, so they are confident the funds are being used for the purpose intended. Review grant compliance to ensure all funds have been spent according to grant agreements.

Review Budgets and Cash Flow

Conduct a review of the current year’s budget vs actual figures. This will support you in understanding your organisation’s financial health and preparing a budget for the upcoming year.

This will highlight any cash flow issues, ensuring you are aware of all upcoming obligations and have the means to accommodate them.

You can prepare a variety of (2-3) budgets scenarios to present to the Board. Having the foresight to predict a variety of expectations for income, grants, fund raising etc. will enable you to be prepared for a number of possible outcomes. Also take into account any projects about to be rolled out.

Financial Transparency

At the November board meeting, reports, budgets and cash flows can be presented and discussed. Your financial statements offer a snapshot of your organisation’s financial health. These documents are often required for external audits or annual reporting to government agencies and donors and are particularly relevant at EOFY.

Even if your NFP isn’t legally required to undergo an audit, conducting an internal review ensures you’re adhering to best practices. Internal reviews can help identify any potential issues before they become larger problems.

Any amendments discussed at the November board meeting can be input and signed off by the Board at the December meeting, in preparation for the end of the current financial year, and then looking to the future.

Once the Board has accepted the budget for the new financial year, this needs to be entered into your accounting software, in preparation for the year ahead. Preparing reports with comparisons between actuals and budgets gives the Board and management regular insight into your operating monthly trends.

Ensure Payroll Compliance

Payroll and general employee compliance is something that always needs to be monitored, but EOFY is the perfect time to double-check full compliance. Verify that all employee entitlements, including superannuation, leave accruals, and tax obligations (PAYG) have been accurately calculated and paid or reported.

Review any changes in payroll legislation that may impact your organisation.

Ensure that salary packaging agreements are up to date and current. Be aware of any upcoming changes in either legislation or the salary packaging provider, so you can advise staff, or make necessary changes.

Plan for Tax Deductible Donations and Grants

Although this isn’t specifically related to preparations for the EOFY, as an NFP organisation, you’re always looking for donations and grants to support the services you provide. Some of you may have approved DGR (Deductible Gift Recipient) status. This is where all NFP organisations should aspire to be, as it means organisations, or people providing funds and donations, can claim a tax-deductible expense.

Analysing EOFY preparation is a good time to evaluate your fundraising efforts. NFPs with DGR status should maximise this by reminding donors that their donations are fully tax-deductible.

Budgets and reporting demonstrate how funds are allocated, building trust with donors and stakeholders.

Communicate with Stakeholders

EOFY is the ideal time to communicate with everyone who has an interest in your NFP organisation. Donors, staff, volunteers, general community supporters, and of course board members, all play an integral part in the success of your organisation.

Consider sending a newsletter or holding a virtual meeting to share highlights of the year, financial performance and upcoming goals.

Transparent communication encourages trust and continued support. It’s also an opportunity to thank everyone for their contribution.

Preparing for the Annual General Meeting

The AGM is an important regulatory obligation. Although you may not have planned the exact date as yet, it is likely to be within 4 months of the end of year. In that time, your Auditor will be required to complete their work, in time for you to present to the Board to be signed off, well in advance of the AGM.

To ensure an easy audit, Auditors usually provide a checklist. Make sure you work through the list and provide everything required. This ensures a smooth audit and a good working relationship with your Auditor.

As a general guide, they will require copies of board meeting minutes, copies of contracts from grant donors, general financial documentation, such as bank statements, and supporting documentation of major asset acquisitions.

Uploading the documentation required to a shared platform will assist both you and the auditor to ensure all requirements have been met.

For NFPs, the EOFY is more than just a time to tie up loose ends. It’s an opportunity to reflect on achievements, evaluate financial health and ensure compliance with all obligations. Proper preparation not only keeps the organisation running smoothly but builds confidence and strengthens accountability in the community.

Preparing for EOFY doesn’t have to be a stressful process. By starting early and keeping good records throughout the year, your NFP can navigate this time efficiently, with full financial transparency, and, most importantly, ongoing success in making a positive impact in the community.

Here is a link to a helpful self-assessment tool:

https://www.communitydirectors.com.au/help-sheets/board-self-assessment-tools

At WestBAS, we specialise in supporting Not-For-Profit organisations to set up efficient bookkeeping systems that streamline financial management and enhance growth. Contact us today to learn how we can become part of your financial team and support your success.