If your smaller nonprofit uses the cash basis of accounting and routinely prepares interim financial statements, you may have noticed that your auditors propose financial statement adjustments at year end. Why is this happening? In general, such adjustments reflect differences between the cash basis and accrual basis of accounting. Accrual accounting is required by GAAP and typically is used by larger nonprofits and those with diverse funding sources. You can reduce disparities between monthly and year-end statements by using the right accounting software and by making more accurate estimates throughout the year. Contact us for help.