If your fiscal year-end is December 31, you have to complete all the necessary steps for closing the fiscal year while also preparing W-2s, 1099s, and donor giving statements. With a little planning though, you can avoid long hours and frustrated staff, no matter when your fiscal year ends. Here are the top 10 things you can do to make the end of the year easier:
- Prepare a monthly closing checklist. This list should include items such as bank reconciliations, investment reconciliations, and items 2 through 5 below. It should also include the name and initials of the preparer and reviewer. Set a realistic timeframe for completing the checklist each month and monitor it for compliance.
- Perform monthly donor reconciliation. Reconcile the donor system with the contribution accounts in the general ledger on a monthly basis. This will allow you to detect any errors or unusual reconciling items, such as recognition of pledges, and will make the year-end reconciliation quicker. Even if you use an integrated church management system, posted journal entries could result in differences.
- Track temporarily restricted net assets. When donors give amounts for specific purposes, you need to track the amounts received and when and how they were spent. Doing this monthly will save you significant time and effort at year-end.
- Track employee benefit hours. Your annual financial statements must include the value of any benefit hours (such as vacation time) paid out, times the pay rate. That will be easier to do if you calculate the amounts earned and used on a monthly basis.