Step 1: Reconcile Everything (and We Mean Everything)

It might sound basic, but bank and credit card reconciliations are the foundation of accurate books.

Why it matters:

• Auditors and reviewers start by confirming that your balances tie to actual bank statements. 
• Bonding agents and funders rely on reconciled statements to measure liquidity and financial stability. 

Checklist:

✅ Reconcile all bank accounts through the last statement date of the fiscal year. 

✅ Reconcile credit cards, lines of credit, and loan accounts. 

✅ Review payroll liability accounts to ensure all withholdings were remitted. 

✅ For nonprofits, verify petty cash and restricted account balances. 

✅ For construction firms, confirm vendor retainage and customer retainage balances match     supporting schedules.

💡 Pro Tip: If your reconciliation screen in QBO shows “difference = $0.00,” you’re good. If it doesn’t — stop and fix it now before moving on. 

Step 2: Review Accounts Receivable (AR) and Accounts Payable (AP)

Outstanding receivables and payables can make or break your year-end reports. You don’t want auditors calling out stale AR balances or discovering missing invoices. 

Checklist:
✅ Review the AR aging report. Write off uncollectible balances or reclassify retainage receivable. 

✅ Review the AP aging report. Post all bills received but unpaid as of year-end. 

✅ For construction firms, tie AR and AP balances to job schedules and retainage tracking. 

✅ For nonprofits, confirm any amounts due to or from grantors are recorded properly. 

✅ Clean up old vendor credits, unapplied payments, and duplicate entries. 

💡 Pro Tip: Use QBO’s Vendor Balance Detail and Customer Balance Summary reports to catch hidden transactions. 

Step 3: Clean Up your Chart of Accounts

Over time, the chart of accounts tends to bloat with unused or redundant accounts. Year-end is the perfect time for a cleanup. 

Why it matters:

• Simplified reporting = clearer insight for boards, lenders, and bonding agents. 
• Cleaner structure supports accurate job costing and grant allocation. 

Checklist: 

✅ Merge duplicate expense accounts (e.g., “Office Supplies” and “Supplies”). 

✅ Archive unused accounts.

✅ Verify proper grouping for construction cost codes or nonprofit functional expenses. 

✅ For nonprofits, confirm program expenses are categorized as Program, Management & General, or Fundraising. 

✅ For construction, verify Cost of Goods Sold (COGS) account reflect labor, materials, subcontractors, and equipment.
💡 Pro Tip: Use QBO’s “merge accounts” feature carefully — and always back up your data first.

Step 4: Confirm Payroll Accuracy

Payroll is often the single largest expense for both construction firms and nonprofits — and the first place auditors look for errors. 

Checklist: 

✅ Verify that all pay periods are posted in the correct fiscal year. 

✅ Reconcile W-2 wages to the general ledger 

✅ Review payroll liability accounts (taxes, insurance, benefits).

✅ For construction, allocate wages correctly to jobs or overhead. 

✅ For nonprofits, ensure payroll allocations to programs or grants match approved budgets. 
💡 Pro Tip: If your team uses timesheets, export them and cross-check hours against job or grant allocations. It’s much easier to fix now than after your audit begins.

Step 5:  Inventory, Retainage, and WIP (for Construction Firms)

Construction accounting requires special attention to Work In Progress (WIP) schedules and retainage. These items don’t exist in standard small-business accounting, which is why construction firms often struggle with financial reviews.

Checklist:
✅ Prepare a WIP schedule listing all active jobs:

• Contract value
• Billed-to-date
• Costs-to-date
• Estimated cost to complete

✅ Identify overbillings and underbillings and adjust revenue accordingly.
✅ Reconcile retainage receivable and payable to contract documents.
✅ Review inventory or materials-on-hand balances and adjust to physical counts.
✅ Confirm subcontractor 1099 data is complete and accurate.

💡 Pro Tip: Bonding companies and CPA reviewers expect WIP schedules at year-end — even for smaller contractors. Accurate WIP data can increase bonding capacity and credibility.

Step 6: Restricted Funds and Grant Balances (for Nonprofits)

For nonprofits, the year-end focus shifts to grant management and restricted funds. Funders want assurance that restricted funds are used correctly and that revenue is recognized properly.

Checklist:
✅ Reconcile all grant income and expense accounts.
✅ Verify restricted cash balances tie to restricted fund balances.
✅ Review deferred revenue (unspent grants) and release amounts to income as funds are spent.
✅ Confirm all donor restrictions are documented in the ledger.
✅ Prepare a grant summary schedule for the audit — list each grant, total award, expenditures to date, and remaining balance.💡 Pro Tip: Class tracking and location tracking in QBO can make this process automatic if set up properly. If not, consider a QBO Cleanup before next year.

Step 7: Review Fixed Assets and Prepaids

Auditors will expect a clear record of capitalized assets, depreciation, and prepaid expenses.

Checklist:
✅ Review your fixed asset register. Add any new vehicles, equipment, or computers purchased during the year.
✅ Record depreciation for all applicable assets.
✅ Verify disposals or sales are recorded properly.
✅ Review prepaid expenses (insurance, rent, software subscriptions) and amortize monthly.💡 Pro Tip: Create recurring journal entries in QBO to automate depreciation and prepaid amortization going forward.

Step 8: Prepare Supporting Schedules

Supporting schedules are the “evidence” your CPA or auditor will request first. Having them ready shortens review time — and reduces your bill.

Checklist:
✅ Accounts Receivable Aging (final, post-adjustments)
✅ Accounts Payable Aging (final)
✅ Fixed Asset & Depreciation Schedule
✅ WIP Schedule (construction)
✅ Grant Summary (nonprofit)
✅ Payroll Summary by Job or Program
✅ Retainage Receivable/Payable Schedule
✅ Trial Balance and General Ledger

💡 Pro Tip: Store these schedules securely (Google Drive, SharePoint, or your CPA’s portal). Avoid emailing sensitive data like payroll records.

Step 9: Perform a Trial Balance Review

Before handing off your books, do one last trial balance review.

Checklist:
✅ Compare current year balances to prior year for major accounts. Investigate large variances.
✅ Review expense accounts for reasonableness.
✅ Confirm equity accounts match ownership or fund restrictions.
✅ Make sure there are no negative balances in asset or liability accounts.
💡 Pro Tip: Run your Profit & Loss and Balance Sheet reports “by month” — unusual spikes will stand out immediately.

Step 10: Lock Your Books

Once your review is complete, close the books to prevent changes.

In QBO:

1. Go to Settings → Accounts and Settings → Advanced
2. Set a closing date and require a password for any future changes.

Why it matters:

• Protects data integrity.
• Prevents accidental edits after the CPA review or audit has begun.
• Demonstrates strong internal controls — something auditors love to see.

💡 Pro Tip: Only your administrator (or controller) should know the closing password.

Bonus: Communicate with Your CPA or Auditor Early

Don’t wait until the audit letter arrives to make contact. Reach out now to confirm:

• Deadlines for deliverables
• Any new reporting standards (e.g., revenue recognition changes)
• Document upload methods and formats

Why it matters:
Proactive communication avoids surprises and builds confidence with your CPA, bonding company, or funders.

Preparing for the Year-End Audit or Review

Once your year-end close is complete, your auditor or CPA reviewer will request documentation. Typically, they’ll ask for:

• Bank statements and reconciliations
• AR/AP detail
• Payroll reports and tax filings
• WIP or grant schedules
• Board minutes and signed contracts
• Insurance policies and tax returns

Having these ready shortens your review period — and saves money on hourly fees.

For construction firms, ensure:

• WIP schedules tie to the general ledger.
• Retainage is clearly presented.
• Percentage-of-completion revenue is properly calculated.

For nonprofits, ensure:

Grant reports match general ledger data.

Restricted vs. unrestricted funds are clearly separated.

Functional expense allocations are documented.

The Role of QBO Cleanups in Year-End Preparation

Here’s the reality: most year-end chaos comes from messy books. That’s why we often start with a QuickBooks Online Cleanup before the close.

During a cleanup, we:

• Reconcile accounts from January through current month.
• Correct misclassified income and expense transactions.
• Fix payroll allocations to jobs or programs.
• Clean vendor and customer lists.
• Prepare accurate opening balances for next year.

Once your QBO file is clean, automation (bank rules, integrations, payroll syncs) can take over — so next year’s close is even smoother.

How Parkins Financial Helps

At Parkins Financial, we believe year-end shouldn’t be a scramble — it should be a strategy. Our team helps construction companies and nonprofits stay audit-ready year-round through:

• 🔹 QuickBooks Online Cleanups & Setups
• 🔹 Job Costing & WIP Schedules for Construction Firms
• 🔹 Grant & Restricted Fund Accounting for Nonprofits
• 🔹 Payroll Allocation & Automation Setup
• 🔹 Outsourced Controller Reviews (monthly or quarterly)
• 🔹 Audit Preparation & Supporting Schedule Templates

We speak both construction and nonprofit — two worlds that demand accuracy, compliance, and transparency.

So, before your next audit or financial review, take a few hours to walk through this checklist. You’ll not only make your auditor’s job easier — you’ll also gain the kind of financial clarity that powers smarter decisions all year long.

Ready to Simplify Your Year-End Close?

Let’s clean up your QuickBooks, prepare your WIP or grant schedules, and get your books audit-ready.👉 Schedule a free consultation with Parkins Financial today and start the new year confident, compliant, and in control.