For accountants, the charity’s year-end is a stressful time. With lots of pressure from internal and external stakeholders, you have to undertake a lot of work in a short space of time, coordinate the work of others, prepare for meetings and present financial information to trustees. All of these may be events that are outside your normal day-to-day experience. On top of all that, you have external auditors coming in to check your work. So what can you do to manage the snakes and ladders of the year-end process effectively?
Project management of your charity’s year-end
The most effective way to handle a year-end process is to treat it like a project. You need to think about:
- Who else needs to be involved – what about contributions to the annual report?
- What information do you need to prepare the first draft accounts?
- Do you need external information such as valuations?
- How will you gather the information to complete the notes to the accounts e.g. related party transactions, contingent liabilities or capital commitments?
- Do you need to obtain returns from branches or other offices?
- How will the report and accounts be checked, edited and finalised?
- How will the report and accounts be approved? Who needs to see them beforehand and which meeting will approve them?
- When should the auditors attend to undertake the majority of the audit work?
- Will the auditors need to liaise with third parties?
Once you have assembled some basic information, you can convert this into a basic project plan. A simple Word document is sufficient to set out tasks, who is leading on them and the timeline.
Having developed a project plan and timetable, you need to communicate this to everyone involved and get their buy-in. Ask them when they can complete tasks and provide information and then write down their actions and target completion dates in front of them. Follow up with a personalised written note of their agreed action and timescale. Get each person to positively confirm their commitment to the plan.
So often, tasks that could have been undertaken well in advance are left until last minute. The aim should be for the year-end to be a smooth, predictable process, not a drama.
- Discuss with key stakeholders whether change is needed from previous reports and establish the key audience for this report
- Establish whether the formal report and accounts will be the only document or whether other forms of communication will be used to report the organisation’s work
- Sketch out the key points that need to be made in the trustees’ annual report
- Prepare a template of the accounts, inserting the previous year’s numbers
- Consider the accounting policies, and notes to the accounts and ensure that these have been updated to include new activities or reflect changes
- Revise your task list to ensure that this includes all the steps to preparing the notes for the accounts
Practice makes perfect
If you are new to the organisation, have a new team or have installed new software, it may be an idea to have a practice run at the year end. Try out the whole year-end accounting process on the nine-month management accounts. It will ensure that you reconcile all the control accounts, produce a balance sheet and consider all the debtors, creditors and balance sheet accounts. Running a year-end process as a practice will highlight information gaps, the right order for tasks and who needs to be involved. For example, it is essential to reconcile all bank accounts and all control accounts before you start the preparation of the accounts.
Setting up a file on paper or electronically that is organised according to the balance sheet, and income and expenditure categories will give you a good overview of progress. You will be able to see at a glance how far you have prepared the working papers.
When the auditors come in to undertake their fieldwork, you can pass them the file. Not only will they be overjoyed to have a file organised as they like it, but they will be able to work efficiently. You can make sure that they are not wasting time waiting for schedules, looking for documents or undertaking basic accounting work. Audit fees are based on the time spent on your audit, so less time means lower fees.