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How to Prepare for a Not-For-Profit Financial Statement Review 

For not-for-profit organizations, financial transparency is more than a best practice, it’s a responsibility. Donors, board members, and grantors rely on accurate financial reporting to understand how resources are being used and to make informed decisions about future support.  A financial statement review provides an added level of credibility and assurance without the full scope of an audit. …

For not-for-profit organizations, financial transparency is more than a best practice, it’s a responsibility. Donors, board members, and grantors rely on accurate financial reporting to understand how resources are being used and to make informed decisions about future support. 

A financial statement review provides an added level of credibility and assurance without the full scope of an audit. Understanding what to expect and how to prepare can help your organization approach the review process efficiently and confidently. 

What Is a Financial Statement Review? 

A financial statement review is a type of assurance service in which a CPA evaluates your organization’s financial statements to determine whether they are free of material misstatements. Unlike an audit, a review does not involve testing internal controls or verifying transactions, but it does provide limited assurance that the financial statements are presented in accordance with generally accepted accounting principles (GAAP). 

A review is often required by lenders, grantors, or boards of directors when an organization requires an independent level of limited assurance that its financial statements conform to professional standards, without the extensive procedures of a full audit. It serves as a middle ground for growing organizations that have moved beyond a simple compilation but do not yet necessitate a full-scope audit.

Why a Review Matters 

While less extensive than an audit, a financial statement review still offers significant benefits to not-for-profit organizations. It helps: 

  • Increase credibility with funders and donors 
  • Identify inconsistencies or potential issues in financial reporting 
  • Strengthen internal accounting processes 
  • Provide valuable insights into your organization’s financial health 

A review can also serve as a stepping stone toward future audits as your organization grows and financial reporting requirements expand. 

How to Prepare for a Financial Statement Review 

Preparation is key to a smooth and successful review process. Here are several steps your not-for-profit can take to get ready: 

1. Organize Your Financial Records 

Ensure your accounting records are complete and accurate. This includes general ledgers, bank reconciliations, accounts payable and receivable schedules, and payroll documentation. Organized financial data allows your CPA to conduct the review efficiently and minimizes follow-up questions. 

2. Reconcile All Accounts 

Before the review begins, verify that all bank, investment, grant, and liability accounts are reconciled through the end of the reporting period.

3. Review Revenue and Expense Classifications 

Make sure revenues and expenses are properly classified according to your chart of accounts. For not-for-profits, this includes distinguishing between restricted and unrestricted funds and separating program, management, and fundraising expenses. 

4. Prepare Supporting Documentation 

Your CPA will likely request supporting documents for significant transactions, grants, or contributions. Having invoices, contracts, and grant agreements readily available will help the process move quickly. 

5. Evaluate Internal Controls 

Even though a review does not include formal testing of internal controls, it’s a good opportunity to assess your systems for managing cash, approving expenses, and safeguarding assets. Addressing weaknesses ahead of time can strengthen your financial management and reduce future risk. 

6. Communicate with Your CPA 

Schedule a pre-review meeting to discuss timelines, expectations, and any major changes in your organization’s operations or funding sources. Clear communication helps ensure that the review focuses on what’s most important to your organization. 

What to Expect During the Review 

During a financial statement review, your CPA will perform analytical procedures, ask management questions, and review documentation to assess the accuracy of your financial statements. The goal is to confirm that your financials make sense based on your organization’s activities and records. 

At the conclusion of the process, your organization will receive reviewed financial statements accompanied by an Independent Accountant’s Review Report. This report provides limited assurance that the accountant is not aware of any material modifications that should be made to the financial statements for them to be in accordance with GAAP.

Strengthening Financial Confidence 

Completing a financial statement review is more than a compliance exercise, it’s an opportunity to gain a clearer picture of your organization’s financial standing. The insights you receive can guide better decision-making, support future funding requests, and reinforce the trust of your board and community. 

Regular reviews also help not-for-profits build stronger accounting practices and prepare for potential audits down the road. 

How De Boer, Baumann & Company Can Help 

At De Boer, Baumann & Company, we understand the importance of reliable financial reporting in the not-for-profit sector. Our experienced professionals provide tailored review and assurance services designed to meet your organization’s specific needs. 

From preparing your records and guiding you through the review process to offering recommendations for stronger financial practices, our team is here to help you achieve clarity, confidence, and compliance. Let us help you focus on your mission, while we take care of the numbers. 

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The Retirement Tax Surprise: What Boomers Need to Know Before It’s Too Late

You did it. You worked hard, saved consistently, and now you’re either enjoying retirement—or it’s just around the corner.  You’ve been told for years to put money into retirement accounts, defer taxes, and wait for the golden years. But wait… no one told you?  Retirement might be your highest-taxed phase yet.  Seriously. Between Social Security income, …

You did it. 
You worked hard, saved consistently, and now you’re either enjoying retirement—or it’s just around the corner. 

You’ve been told for years to put money into retirement accounts, defer taxes, and wait for the golden years. But wait… no one told you? 

Retirement might be your highest-taxed phase yet. 

Seriously. 
Between Social Security income, Required Minimum Distributions (RMDs), capital gains, Medicare premium adjustments, and even state taxes… it can feel like a financial ambush. 

Let’s break down why this happens—and what you can do now to soften the blow. 

  1. RMDs: The Tax Bomb That Starts at Age 73

If you’ve saved in a traditional IRA or 401(k), you’ve been enjoying tax deferral for years. But the IRS eventually wants their cut. 

That’s where RMDs come in. 
Once you hit age 73, you’re forced to take money out of your retirement accounts—and those withdrawals are taxed as ordinary income. 

Why it matters: 

    • Your RMD could bump you into a higher tax bracket. 
    • It could trigger higher Medicare premiums (thanks, IRMAA). 
    • It might even impact how much of your Social Security is taxed. 

What to do now: 
Consider Roth conversions in your 60s to reduce your future RMDs. Yes, you’ll pay tax now, but it could save you significantly down the road. 

  1. Social Security Isn’t Always Tax-Free

Up to 85% of your Social Security benefits could be taxable depending on your total income—including investment income, part-time work, and yes, those RMDs. 

Here’s the trap: 
You think you’re getting $3,000/month from Social Security. 
But add in just a few thousand from another source, and suddenly, a big chunk of that is taxable. 

Solution: 
Work with an advisor who can map out income sources before you trigger your benefits. Sometimes, waiting a year or two—or rebalancing your withdrawal strategy—can dramatically reduce taxes. 

  1. IRMAA: The Medicare Surcharge You Didn’t See Coming

This one stings. 
You file your taxes, enjoy a good year, and then boom—two years later, your Medicare premiums go up. 

That’s IRMAA (Income-Related Monthly Adjustment Amount). 
If your income exceeds certain thresholds, you’ll pay more for Medicare Part B and D—even if the bump was from a one-time event like a Roth conversion or asset sale. 

Proactive planning = lower premiums. 
A well-timed income strategy can keep you just under IRMAA thresholds. And in some cases, you can file an appeal based on a “life-changing event” like retirement or loss of income. 

  1. Capital Gains & Selling Assets in Retirement

Selling your long-held investments? Downsizing your home? 
These capital gains could push your income higher than expected—and cause a domino effect with taxes, Medicare, and Social Security. 

Even if you’re “living off savings,” your tax return may tell a different story. 

Pro tip: 
There’s a 0% capital gains bracket for certain income ranges. With the right strategy, you can sell appreciated assets without triggering taxes—but timing is everything. 

  1. State Taxes Still Matter—Even in Retirement

Not all states treat retirees the same. 
Some tax Social Security, some don’t. Some offer pension exemptions, others tax everything. 

If you’re thinking about relocating in retirement, don’t just compare housing costs. Compare tax policies. And if you’re staying put? Learn how your current state impacts your bottom line. 

  1. Your Filing Status Can Change Your Tax Life

A tough but important truth: Losing a spouse in retirement often means going from “Married Filing Jointly” to “Single.” 

Which means: 

    • Lower standard deductions 
    • Tighter income thresholds 
    • Bigger tax bills on the same income 

If you’re newly widowed or preparing for that reality, it’s worth building a multi-year tax strategy now—not later. 

    1. You Don’t Have to Navigate This Alone

The retirement tax landscape is not DIY-friendly. 
Rules change. Thresholds shift. And one wrong move (or missed opportunity) can cost you thousands. 

But with the right guide, you can: 

    • Smooth out income across years 
    • Reduce your lifetime tax bill 
    • Maximize your Social Security and Medicare benefits 
    • And keep more of the money you worked so hard to earn 

Let’s Build a Tax-Smart Retirement Plan—Together 

You planned for retirement. 
Now it’s time to plan for retirement taxes. 

We’re here to help you make smart, proactive decisions that reduce surprises, minimize your tax burden, and give you the peace of mind to enjoy the years ahead. 

Contact us today to schedule a retirement tax check-up. 
You’ve done the saving—now let’s make sure you keep more of it. 

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What Employers Need to Know: The Earned Sick Time Act (ESTA) Takes Effect February 21, 2025

On February 21, 2025, Michigan’s Earned Sick Time Act (ESTA) will go into effect, bringing significant changes to the way businesses handle sick time for their employees. This law applies to all employers with one or more employees, excluding the U.S. Government, and it mandates that employees begin accruing earned sick time. Let’s take …

On February 21, 2025, Michigan’s Earned Sick Time Act (ESTA) will go into effect, bringing significant changes to the way businesses handle sick time for their employees. This law applies to all employers with one or more employees, excluding the U.S. Government, and it mandates that employees begin accruing earned sick time. Let’s take a closer look at what employers need to know to prepare.

Accrual and Limits

  • Accrual Rate: Employees will accrue 1 hour of sick time for every 30 hours worked, which breaks down to roughly 0.0334 hours per 1 hour worked.
  • Caps: Employers can choose to cap accrual at 72 hours of sick time per year. However, any unused time must roll over year to year, with no cap on the amount that can accumulate. Keep in mind that while rollover is unlimited, employees can be restricted to 72 hours per year unless the employer opts for a higher limit.

 

Tracking and Usage

  • Smallest Increments: Employers must allow employees to use sick time in the smallest increment used by the payroll system. For example, if employees are paid per minute, sick time can be taken minute-by-minute.
  • Non-Disciplinary Absences: ESTA time is exempt from disciplinary policies. Absences taken under this leave cannot be counted against an employee in terms of any absence policy.

 

Documentation and Restrictions

  • Reasonable Documentation: After three consecutive days of leave, employers can request reasonable documentation for sick time. However, employers cannot require employees to search for a replacement worker.
  • No Payout at Termination: Employers are not required to pay out unused sick time upon termination. However, if an employee is rehired within 6 months, they are entitled to keep their accrued sick time.

 

Family Members

  • Who’s Covered? ESTA defines family members broadly, including children, parents, grandparents, and even siblings, as well as individuals with whom the employee shares a close relationship. Employees can use sick time for their own or a family member’s illness, medical appointments, or issues related to domestic violence and sexual assault.

 

Key Considerations for Employers

  • Tracking Records: Employers must maintain records of earned sick time for at least one year. However, most recommend keeping these records for seven years by integrating them into payroll systems.
  • Discipline Policies: Be mindful of your discipline policies, especially if you plan to avoid tracking reasons for ESTA absences. This could complicate any progressive discipline process related to attendance.

 

Does ESTA Affect Collective Bargaining Agreements?

Yes, if employees are part of a collective bargaining agreement (CBA), the terms of the CBA may affect how ESTA applies. The law does not override sick leave benefits negotiated in an existing CBA unless that agreement is silent on the issue.

 

Action Items for Employers:

  1. Review and Adjust Policies: Ensure that your sick leave policies comply with ESTA, including accrual rates, limits, and rollover rules.
  2. Update Payroll Systems: Verify that your payroll system can track sick leave accruals accurately and in the smallest increments.
  3. Plan for Documentation: Review your documentation process for sick time, especially regarding medical leave requests after three consecutive days.
  4. Prepare for Compliance: Since ESTA applies to all employees, regardless of work location (as long as they are in Michigan), ensure that your records reflect the correct status for any employees working out-of-state.

 

With ESTA taking effect in just over a month, it’s crucial to start preparing now. Employers who don’t comply with the new law could face penalties. If you need assistance in adjusting your policies or ensuring compliance, we’re here to help.

Stay informed, and make sure your business is ready for the upcoming changes.

Health Savings Accounts Fill Multiple Tax Needs

The Health Savings Account (HSA) is one of the most misunderstood and underused benefits in the Internal Revenue Code. Congress created HSAs as a way for individuals with high-deductible health plans (HDHPs) to save for medical expenses that are not covered by insurance due to the high-deductible provisions of their insurance coverage.
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Keep Your Money in the Family with These Estate Planning Tips

This article explains why and how keeping money within the hands of the people you trust will help you in the future. Heirs could be responsible for “paying federal income taxes on either assets or retirement accounts, and if you plan poorly, your money could end up in the hands of an ex-spouse or …

About us

De Boer, Baumann & Company provides professional accounting, tax, and business advisory services to individuals and businesses in West Michigan and the surrounding areas. With expertise in a variety of industries, DBC specializes in comprehensive and innovative solutions to help clients achieve their financial goals.