Audit preparation can quickly become time-consuming, even when your business office is well organized. The financial statements may be ready, and reconciliations may be complete, but then the auditor asks for a supporting schedule, an explanation for a variance, or a document from earlier in the year. Suddenly, you’re spending hours tracking things down.
A good school audit checklist can help reduce that last-minute work. The goal isn’t simply to gather a long list of documents. It’s to make sure your numbers are supported, your records are organized, and you can answer common questions before the audit begins.
This guide walks through the key areas business officers should review, from last year’s audit findings to the final days before fieldwork.
Use Prior Audit Findings to Guide This Year’s Preparation
It can be tempting to start audit preparation by gathering this year’s documents. Before you do that, take a look at last year’s audit report.
Review any findings, recommendations, or areas where the auditor asked for additional information. If there were issues with reconciliations, documentation, or internal controls last year, check whether those issues have been addressed.
The management letter is also worth reviewing. It may include recommendations that aren’t part of the formal audit findings but could still be relevant this year.
It’s also a good time to review any nonprofit audit requirements that apply to your school and make sure your records and procedures address them.
Take a look at any adjusting entries made during the previous audit as well.
A few useful questions to ask are:
- What questions did the auditor ask last year?
- Were any corrections or adjustments needed?
- Were any documents difficult to locate?
- Did the auditor make any recommendations?
- Have those issues been addressed?
Your answers can help determine where to focus your preparation this year.
Organize the Support Behind Your Numbers
One of the most useful ways to prepare for an audit is to make sure you can easily show where your key numbers came from.
Having the right school finance software can also make it easier to keep financial records, supporting schedules, and account information organized throughout the year.
Start with the financial statements themselves, including the balance sheet, income statement, statement of cash flows, and statement of changes in net assets, where applicable.
Then make sure you have the records that support those statements, such as:
- Year-end trial balance
- General ledger detail
- Journal entries and adjusting entries
- Bank reconciliations
- Accounts receivable schedules
- Accounts payable schedules
- Prepaid expense schedules
- Fixed asset records
- Debt schedules
- Restricted fund records
- Investment or endowment records, where applicable
Each major balance should have supporting information that can be tied back to the general ledger.
Keeping these records organized before the auditor begins fieldwork can make it much easier to respond to requests without having to search for documents at the last minute.
Related resource: Fund Accounting for Schools: Why Traditional Software Fails
Make Sure Your Numbers Tie Together
Reconciliations are an important part of K-12 audit readiness because they help identify differences before the auditor does.
Work through the main areas and make sure the numbers agree:
- Bank balances should agree with bank reconciliations.
- Supporting schedules should agree with the general ledger.
- Accounts receivable records should agree with the GL.
- Payroll reports should agree with the amounts recorded in the accounting system.
- Tuition and fee billing records should support the revenue recorded.
- Restricted fund balances should have documentation showing the related activity.
If you find a difference, investigate it before the audit begins. It is much easier to explain an issue when you’ve already identified the reason and have the supporting documentation ready.
Review Your Revenue Records
Revenue can come from several areas in a school, so it helps to review each one separately.
For tuition and fees, make sure your billing and payment records support the revenue recorded in the general ledger. Also review discounts, financial aid, refunds, credits, and outstanding balances.
For contributions and fundraising income, make sure donation records clearly identify restricted and unrestricted funds and that the related amounts were recorded correctly.
For grants, review the grant agreements and any related requirements. Depending on the terms of a grant, the timing and treatment of the revenue may need additional documentation.
This is particularly important for schools that receive restricted contributions or grant funding. The supporting documentation should make it clear how the funds were received, recorded, and used.
Review Your Expense Records
The same approach applies to expenses.
For a sample of larger or unusual expenses, make sure you can follow the transaction from the original invoice through approval, payment, the general ledger, and ultimately the financial statements.
Review areas such as:
- Vendor invoices
- Purchase orders
- Purchase approvals
- Credit card transactions
- Employee reimbursements
- Contract payments
- Payment records
You don’t necessarily need to review every transaction individually. Taking a closer look at larger or unusual expenditures can help you find missing approvals or documentation before the auditor begins testing.
Review Roles and Responsibilities
Audit preparation isn’t only about documents. It’s also a good time to review how financial responsibilities are divided among your team.
For key financial processes, ask:
- Who starts the transaction?
- Who approves it?
- Who processes the payment?
- Who records it?
- Who reconciles the account?
Ideally, these responsibilities aren’t all handled by the same person without any review or oversight.
It’s also worth checking financial system access. Make sure employees still have access appropriate to their current roles, particularly if your business office has had staffing changes during the year.
If someone has taken on new responsibilities, make sure there is a clear process for reviewing their work and handling their responsibilities when they’re away.
Review Financial Activity Across the School
Not all financial activity happens within the business office.
Depending on your school, you may also need to review:
- Student activity funds
- Athletics accounts
- Club and organization funds
- Field trip collections
- Event receipts
- Petty cash
- School store revenue
- Fundraising proceeds
These areas may be managed by coaches, teachers, club advisors, or other staff members. Make sure the same basic controls are being followed, including appropriate approvals, documentation, deposits, and recordkeeping.
Small amounts can add up, so it’s worth making sure these activities are included in your audit preparation.
Review Fixed Assets
Fixed assets may not change as frequently as other accounts, but they still need to be reviewed.
Start with your fixed asset register and compare it with activity during the year. Check for:
- New equipment and other purchases
- Disposals
- Depreciation
- Capital projects
- Construction in progress
Also confirm that items listed on the register are still in use or otherwise accounted for.
Schools may replace old equipment, sell vehicles, or make changes to buildings during the year. Make sure those changes have been reflected in the fixed asset records.
Review Payroll Records Carefully
Payroll deserves a separate review because it involves a large number of transactions and several related records.
Before the audit, compare payroll records with the general ledger and review:
- Payroll reports
- Tax filings
- Benefits
- Accrued payroll
- PTO balances
- Retirement contributions
- Employee classifications
- Year-end payroll adjustments
Pay particular attention to year-end adjustments and accrued amounts. Reviewing these ahead of time can help catch differences before the auditor starts testing.
Do a Final Review for Common Issues
Before the audit begins, take some time to look for issues that could lead to additional questions.
Check for:
- Old unreconciled balances
- Missing supporting documentation
- Unusual journal entries
- Long-outstanding receivables
- Large changes from the prior year
- Unusual or negative account balances
- Transactions recorded in unexpected accounts
- Missing approvals
- Long-outstanding checks
- Accounts that have required repeated corrections
If you find something unusual, take the time to understand what happened and document the explanation.
You don’t need every account to be perfect. What matters is knowing what is in your records, being able to explain significant items, and addressing issues you find.
Use a 30-Day Audit Preparation Timeline
Working backward from the start of fieldwork can make the preparation process more manageable.
30 days before the audit
- Review the prior year’s audit findings and recommendations.
- Complete major account reconciliations.
- Review unusual or significant balances.
- Identify missing documents or schedules.
- Check areas that required adjustments last year.
14 days before the audit
- Finalize supporting schedules.
- Organize requested documents.
- Review financial statement accounts.
- Resolve outstanding discrepancies.
- Check that supporting schedules agree with the general ledger.
7 days before the audit
- Review the auditor’s PBC list.
- Check which requests are still outstanding.
- Review significant or unusual transactions.
- Make sure staff know which areas they may be asked about.
1–2 days before the audit
- Confirm access to records and systems.
- Make sure requested files are easy to locate.
- Complete a final reconciliation review.
- Confirm who will be the main contact for each area.
- Make sure meeting space and other logistics are ready.
Keep the PBC List Organized and Assigned
PBC stands for Prepared By Client. Auditors commonly use a PBC list to identify the documents and information they need from the school.
A simple tracking sheet can make these requests easier to manage. Include an owner and status for each item so everyone knows what still needs attention.
| Audit Request | Owner | Status | Supporting File |
| Bank reconciliations | Business Office | ☐ | |
| GL / Trial Balance | Finance | ☐ | |
| AR schedule | Finance | ☐ | |
| AP schedule | Finance | ☐ | |
| Fixed assets | Business Office | ☐ | |
| Payroll records | HR / Finance | ☐ | |
| Debt schedules | Finance | ☐ | |
| Contributions | Advancement | ☐ | |
| Prior audit findings | Business Office | ☐ |
Assigning an owner to each request helps prevent items from getting overlooked and makes it easier to see what is still outstanding.
If You Find an Issue, Address It Before the Audit
Finding a discrepancy during your preparation doesn’t necessarily mean something has gone seriously wrong.
For example, suppose you find a $12,000 difference during a reconciliation. Start by identifying where the difference came from. Then gather the documentation, determine whether a correction is needed, make the correction if appropriate, and check whether the same issue appears anywhere else.
The goal is to understand the issue and have the supporting information ready before the auditor asks about it.
Use the Audit Results to Prepare for Next Year
Once the audit is finished, don’t put the checklist away until next year.
Review the audit findings and recommendations while they are still fresh. For each item that needs attention, determine:
- What needs to be changed?
- Who is responsible?
- When should it be completed?
- Does a policy or procedure need to be updated?
- Does the same issue need to be checked elsewhere?
Keeping up with reconciliations, documentation, and approvals throughout the year can make the next audit much easier.
The best time to start preparing for next year’s audit is while this year’s audit is still fresh. Small improvements made throughout the year are often easier to manage than trying to fix everything in the weeks before fieldwork.
Final Audit Readiness Check
Before the auditor arrives, take one final look at the key areas:
- Bank accounts are reconciled.
- The general ledger agrees with supporting schedules.
- Significant balances can be explained.
- Revenue and expenses have supporting documentation.
- Payroll records have been reviewed.
- Fixed asset records are current.
- Prior audit findings have been addressed or are being worked on.
- Internal controls have been reviewed.
- Requested documents are organized and easy to find.
- Unusual transactions have been reviewed.
- Every item on the audit request list has an owner.
A good school audit checklist is more than a list of documents to gather. It gives the business office a practical way to review the records, address issues early, and make the audit process easier for everyone involved.
