07/13/2026
As your organization grows, there may come a time when a lender, grantor, board of directors, or other stakeholder requires compiled, reviewed, or audited financial statements.
The mistake many organizations make is waiting until that requirement arrives before preparing.
One of the first questions to ask is:
What basis of accounting should your organization be using?
Common bases of accounting include:
• Cash Basis – Records income and expenses when cash changes hands.
• Accrual Basis (GAAP) – Records transactions when they are earned or incurred, regardless of when cash is received or paid.
• Modified Cash Basis – A hybrid approach that combines elements of both cash and accrual accounting.
• Tax Basis – Financial statements prepared using the rules applied for income tax reporting.
Now ask yourself:
✔️ Are your books currently maintained using the required basis of accounting?
✔️ If an accountant requested supporting schedules and documentation today, how prepared would your organization be?
✔️ Would your accounting records withstand the scrutiny of a review or financial statement audit?
Preparing early can save your organization significant time, reduce costs, minimize stress, and help avoid unpleasant surprises during the engagement.
Good financial reporting isn’t just about compliance—it’s about building credibility and giving management confidence in the numbers they rely on to make decisions.
The best time to prepare is before you’re required to.
