When Is Audit Season for Canadian Nonprofits?
If your organization has a December 31 year-end, audit prep typically ramps up in the spring. For nonprofits with a March 31 year-end, the busy season usually hits in spring and summer.
That means now is the time to act if you have a March 31 year end. A little prep work can prevent last-minute scrambles, reduce errors, and help you walk into your audit or board review feeling organized.
At Enkel, we support nonprofit finance teams across Canada with not-for-profit bookkeeping, audit prep, and reporting systems that make this process smoother.
What Triggers a Nonprofit Audit?
There are a few common reasons a Canadian nonprofit might need an audit:
- Funding requirements: Many government grants (and some foundations) mandate an annual audit over a certain funding threshold.
- Bylaws or governance policies: Your board may require an annual audit or financial review, even if funders don’t.
- Legal obligations: In some cases, compliance or regulatory triggers may apply.
- Strategic choice: Some organizations choose to audit voluntarily to build transparency and strengthen fundraising efforts.
Not all audits are the same. Some funders may request a review engagement instead — a lighter, less detailed assessment. (You can read more about audits vs. reviews here.)
Regardless of the format, the more proactive your financial prep, the easier the entire process becomes.
Stay Audit-Ready Year Round
What to Tidy Up Before Your Auditor (or Board) Asks
The fastest way to reduce audit stress is to tackle the following areas early:
Documentation
- Collect and organize your receipts, payroll records, grant agreements, and donation support documents.
- Keep digital files clearly named and stored in cloud folders that are easy for your team — and auditor — to navigate.
- If you’ve received restricted funding, make sure documentation includes terms and usage guidelines.
Fund Tracking
- Confirm that restricted and unrestricted funds are being tracked separately and accurately in your accounting system.
- Create a summary report that shows how each grant or donation was used — this is one of the first things your auditor or funder will ask for.
Budget Reconciliation
- Ensure your budget-to-actuals are current and explainable. Large variances are okay — as long as you can account for them.
- Prepare short notes or memos for your board explaining how actuals diverged from plans, and what adjustments were made.
Trial Balance + Financial Statements
- Prepare a clean trial balance and draft financial statements — including your income statement, balance sheet, and if applicable, statement of operations or cash flows.
- Even if you expect changes after auditor review, having clear, organized financials upfront will speed up the process and reduce surprises. If your internal team doesn’t have capacity, a bookkeeper or external accountant (e.g., Enkel) can prepare draft statements for review.
Internal Communication
- Assign roles: Who’s leading audit prep? Who’s gathering documents? Who answers board questions?
- Create a shared checklist in a Google Sheet or project management tool so everyone stays aligned.
Looking for a more detailed breakdown? Here’s our guide on what to expect during a nonprofit audit.
How to Prevent a Funder Freakout
Funders don’t just want to see the numbers. They want to see that your finances align with your mission.
If your financial statements say one thing but your impact story says another, it creates confusion and concern. That gap can delay grant renewals — or even put funding at risk.
On the other hand, clean books and clear records help you:
- Show how funds were used
- Demonstrate impact in real financial terms
- Build trust with your board and community
Transparency and consistency are your best tools for building long-term support.
Who’s in Charge of What During Audit Season?
Audit prep often feels chaotic because no one’s sure who owns which part of the process. Here’s a simple breakdown of who should handle what — especially helpful for smaller teams.
| Task | Who Should Own It | When to Start |
| Collecting receipts, grant documents, and payroll records | Bookkeeper (e.g. Enkel) or Finance Coordinator | Monthly (ongoing) |
| Tracking restricted and unrestricted funds | Bookkeeper (e.g. Enkel) or Executive Director | Ongoing with monthly check-ins |
| Budget reconciliation and explaining variances | Executive Director, Controller (e.g. Enkel), or outsourced support | Start 2–3 months before audit |
| Preparing draft financial statements | Bookkeeper or external accountant (e.g. Enkel) | 4–6 weeks before audit |
| Preparing a clean trial balance | Bookkeeper or external accountant (e.g. Enkel) | 4–6 weeks before audit |
| Liaising with the auditor or reviewer | Executive Director or Controller (e.g. Enkel) | 1–2 weeks before and during audit |
| Preparing board updates and packages | Executive Director or senior finance lead | Before board review meetings |
| Coordinating the team and keeping timelines on track | Executive Director, Ops Lead, or external advisor | Start of audit prep season |
If you’re working with a lean internal team, this is where external support can fill the gaps. Many nonprofits lean on part-time controllers, bookkeepers, or firms like Enkel to handle specific pieces, especially fund tracking, reconciliations, and audit liaison work.
Set Yourself Up for an Easier Audit Next Year
Even if this year feels like a scramble, you can make next year a whole lot easier by building repeatable systems:
- Monthly Close Checklists. Document your monthly close process and make sure it’s completed on schedule. This helps avoid nasty surprises when year-end hits. A basic monthly close checklist might include:
- Reconcile all bank accounts
- Review accounts payable and receivable
- Tag restricted revenue appropriately
- Review expense allocations
- Save updated financial reports to shared drive
- Reconcile all bank accounts
- Board-Ready Reporting Templates. Build templates for monthly or quarterly reporting that align with what your board and funders expect. Consistent reporting throughout the year reduces prep time during audit season.
- Outsourcing Opportunities. If your team is overwhelmed, consider outsourcing parts of your financial workflow. Services like bookkeeping, payroll, or controllership can ease the burden and reduce risk.
Need Help? Enkel Supports Canadian Nonprofits During Audit Season
Audit season doesn’t have to be a fire drill. Whether you need help cleaning up your books, preparing documentation, or building better systems for next year, Enkel is here to help.
Our Not-for-Profit Bookkeeping Services are designed to support Canadian nonprofits like yours — before, during, and after audit season.
Book a free 1:1 consultation to review your audit-readiness and take the stress off your plate.
