08/25/2026
If your organization is heading into audit season, it helps to know what auditors are actually looking for. It's not just about whether the numbers add up, but it's about the patterns behind them.
Here are 3 red flags to look out for:
1. Mixed or unclear fund tracking - When restricted and unrestricted funds aren't clearly separated, it becomes difficult to demonstrate that donor or grant dollars were used exactly as intended. Auditors look closely at this because it goes straight to donor trust and compliance.
2.Missing or inconsistent documentation - Every transaction should have a clear trail from receipts, approvals, and reconciliations that match up. Gaps here don't necessarily mean something's wrong, but they do invite closer questions.
3.Unclear program and admin expense splits - Boards, funders, and the public often look at how much of your budget goes toward your mission versus overhead. If those categories aren't clearly tracked, it can raise questions about financial oversight.
The common thread? All 3 come down to how consistently records are kept throughout the year, not just how things look right before an audit.