Audits come in two forms: internal audits and external audits. Internal audits focus on reviewing your organization's workflows, settings, and internal controls to reduce risk. External audits involve outside reviewers measuring compliance with guidelines and regulations.
The guidelines in this article focus on internal audit preparation, such as reviewing and configuring CommunitySuite settings and internal controls, to help your organization be well-positioned when an external audit occurs.
Who: Finance and accounting teams and administrators responsible for system configuration, financial reporting, and internal controls in CommunitySuite.
When to Use This Guide
Use this guide to:
- Review and validate site configurations to ensure your site's settings remain accurate and workflows are well-positioned.
- Ensure that you can prepare documentation and have established internal controls ahead of an external audit.
- Identify and address gaps in reporting or internal controls before an audit.
- Inspect site settings that can reduce stress during audit time.
Configure Your Chart of Accounts
The chart of accounts is the foundation of your CommunitySuite site; it is the map that all funds live within. A clean, well-structured chart of accounts supports accurate reporting, reduces audit findings, and ensures the system functions as intended. The recommendations below cover the most common account setup issues that contribute to audit complications.
Use Unique Default Accounts
Navigate to the Home page and click Defaults in the left-side menu. Review your System Default Accounts. Each system action should be mapped to its own unique account. Avoid assigning the same account to more than one system action, as shown in the screenshots below.
Avoid this type of configuration
Correct configuration example
For example, Accounts Receivable, Internal Grants Receivable, and Pledges Receivable should each be mapped to a separate account. CommunitySuite is designed to keep these record types separated, and mixing them in a single account creates reporting complications and audit risk.
For Equity Account Restriction Settings, CommunitySuite is designed to interact with three net asset accounts: a default/retained earnings account, a principal account, and a spendable account. Having more than three net asset accounts requires manual maintenance and is not recommended.
Avoid Redundant Accounts
CommunitySuite functions best with a consolidated chart of accounts. A single account for each system action is usually sufficient, and redundant accounts add unnecessary clutter.
Two common examples where redundant accounts are often carried over from previous systems:
Contribution revenue accounts - There is no need to maintain separate accounts for contributions by net asset intention, such as contributions spendable and contributions non-spendable. CommunitySuite handles this distinction through donation record and fund record settings, so a single contributions account is sufficient.
Grant expense accounts - There is no need to maintain separate accounts for designated grants and pass-through grants. CommunitySuite provides other ways to pull this data through reporting without requiring separate accounts in the chart.
Avoid Header Accounts
Using placeholder or parent accounts to build structure into your chart of accounts can cause unnecessary clutter and reporting complications. It is recommended to build Financial Views or leverage Account Types to organize your chart instead.
The one exception where parent/sub account structures make sense is for organizations that rely heavily on the Functional Expense Report or need to track departmental expenses by account. CommunitySuite allows only one functional expense to be assigned per expense account, so if your organization needs that level of functional expense reporting, a parent/sub structure for those functional expenses is appropriate.
Avoid the Close to Equity Function
Within any revenue or expense account settings, there is a Close to Equity Account field. This function performs retained earnings monthly and allows a revenue or expense account to close to a non-retained earnings equity account rather than to the default retained earnings account. It is recommended to leave this field blank in almost all circumstances.
Set Up IRS 1099 Fields on Expense Accounts
Review every expense account in your chart and confirm that accounts requiring a 1099 field have one assigned. This is an easy setting to overlook during initial setup, but it is much simpler to configure proactively than to troubleshoot at year's end when the 1099 report is not populating as expected.
Reconcile Statement Accounts
Any account that receives a statement should be reconciled in CommunitySuite. This includes bank accounts and investment accounts. It is also recommended to reconcile the Stripe account, even though it does not receive a traditional statement, given the number of donations you receive.
CommunitySuite uses two Stripe reports to support this reconciliation: the Payment Report, which corresponds to donations coming into the Stripe account, and the Stripe Payout Report, which corresponds to transfers from Stripe into your checking account.
Avoid multi-account reconciliations. Each account should be reconciled individually to maintain clean records and a clear audit trail.
Review and Validate Fund Settings and Controls
Fund settings control how your funds behave within your chart of accounts, how they are categorized, how they track balances, and how transactions are processed. Reviewing these settings regularly helps ensure your funds are accurately configured and that your organization has the internal controls in place to support a clean audit.
Categorize Funds with Groups, Subgroups, Divisions, and Segments
CommunitySuite provides four fund categorization fields. Understanding what each is intended for helps ensure funds are organized for accurate reporting.
Fund Groups - The broadest categorization level, representing major fund categories such as donor-advised funds (DAFs), operating funds, or field of interest funds (FOI).
Fund SubGroups - Provide a secondary layer of categorization beneath fund groups, such as interest types or other subcategories that do not fit cleanly into the group level.
Fund Segments - Flexible and can be used for a variety of purposes. One common and effective use is assigning funds to segments based on their fund statement frequency, monthly, quarterly, or yearly, and then generating fund statements by segment rather than generating them for all funds at once.
Fund Divisions - Allows you to map to 990 and 1099 reporting and run those reports by division, and are typically used to represent affiliates or supporting organizations. It is recommended to use fund divisions specifically for this purpose.
Scenario: A Fund is Switching Categories
If a fund needs to switch categories, for example, moving from a donor-advised fund (DAF) to a field of interest fund (FOI), it is recommended to create a new fund rather than editing the existing one. Changing a fund's group on an existing record means that any previously generated financial reports referencing that fund will no longer match if rerun, which can create confusion during an audit.
The recommended steps are to create a new fund under the correct category, transfer the remaining assets from the old fund to the new fund, and close the old fund while retaining fund advisor access to the closed fund so that historical records remain accessible. If the fund uses a distribution or admin fee type that depends on fund balance history, such as a QEV calculation, contact Support to import a QEV history template so the new fund is not starting from scratch.
Configure Fund Details
Settings in the Fund Details tab fall into two categories: those with accounting functionality attached and those that are reporting only.
Settings with accounting functionality:
Agency Fund - If checked on a fund, that fund will be taken into account by the Z_Agency Contra funds calculation to determine the liability reversal on the books. This is the only field in the Details tab of the fund record that has a direct accounting effect.
Settings used for reporting only:
Group, Anonymous, Donor Advised, Affiliate Fund, Default Grant Type, Service Area - These fields do not affect accounting but are important to review for accurate reporting. It is recommended to review these fields across all funds periodically to ensure funds are correctly categorized.
Set Donor and Equity Restrictions
Restriction settings also fall into three categories: reporting only, accounting functionality, and no accounting functionality.
Settings used for reporting only:
With Donor Restrictions - A reporting-only field that allows for Balance Sheet reporting by column. In CommunitySuite, a fund can either be with or without Donor Restrictions. If a fund is supposed to have both, this is best carried out via two separate funds, as CommunitySuite will not split a single fund into two.
Settings with accounting functionality:
Endowed - Enables principal tracking on the fund. When a donation is received, the principal balance increases. It is recommended to enable Track Spendable alongside Endowed, as endowed funds typically earn investment returns that are then distributed as a spendable balance for granting.
Track Spendable - Drives the posting of expenses such as grants and scholarships to the spendable equity. Works in conjunction with distribution types as a soft budget for what the fund plans on expensing.
Settings without accounting functionality:
The Default Restriction, Principal Restriction, and Spendable Restriction fields do not have accounting functionality. They control how the fund's net assets map to columns on the Fund Balance report. The most common mapping is default equals temporarily restricted, principal equals permanently restricted, and spendable equals unrestricted, though these definitions can vary by organization.
Scenario: A Fund Has Not Been Tracking Principal Balance
If a fund is discovered not to have tracked principal balance for an extended period, such as two years, it is recommended to take the following steps.
- Edit the fund record and enable the Endowed and Track Spendable settings.
- Create a journal entry to bring the principal balance to the amount it should reflect retroactively.
- Document the reason for it on the journal entry, on the fund record, and in a shared internal document.
If the fund was only recently created and the oversight is recent, unposting and reposting the relevant donations may be a more precise correction. For older funds with a long history of missed tracking, a journal entry with clear documentation is the more practical approach.
Configure Distribution Settings
The following distribution settings have accounting functionality attached:
Distribution Start Date - Sets a future date before which the fund will not be included in distribution calculations. This is useful for new funds that are not yet large enough to generate a spendable balance. The distribution start date and type can be assigned in advance, and the fund will be excluded from distributions until the start date passes.
Distribution Type - Sets the spending policy for the fund.
Distribution Interval - Limits when a distribution can be posted to the fund. For example, a yearly interval restricts posting to January 1st of each year. It is recommended to leave this field blank in most cases to preserve flexibility in posting timing.
Spendable in Checking - Keeps the spendable balance in the checking account rather than following the investment strategy.
Configure Admin Fee Settings
The following admin fee settings have accounting functionality attached:
Admin Fee Start Date - Works the same way as the Distribution Start Date. The fund will not be charged admin fees until the start date passes, even if an admin fee type is already assigned.
Admin Fee Account - Specifies which asset account the admin fee will be pulled from when the fee is charged. It is recommended to set this field rather than leave it blank. When left blank, the system pulls from the account with the largest asset balance, which may not be the intended account. Setting a specific account ensures the fee is reliably pulled from the correct account every time.
Admin Fee Group - Allows multiple funds to be grouped and charged as if they are a single fund, with the fee distributed proportionally across all funds in the group based on their size. All funds within the group must have the same admin fee types assigned for this feature to work correctly.
Admin Fee Paid By - Allows a designated fund to cover the admin fees of another fund. This is useful for organizations where a generous donor with a large fund has agreed to cover fees for smaller funds.
Admin Fee Reduces Spendable - Causes admin fees to be charged against the spendable net asset rather than retained earnings. This setting is not commonly used but is available for organizations that want admin fee expenses to reduce the spendable balance.
Configure Cash Management Settings
The following cash management settings have accounting functionality attached:
Revshare Options - A fund can be excluded from revenue share entirely, or its gains can be redirected to another fund. One common use case is funds that are 100% liquid or spendable; their earnings from a money market account are redirected to the operating fund until the original funds are spent out.
Manage Cash - It is recommended to set this to Yes for any fund living in a pool with other funds, so that the fund participates in balance swaps.
Investment Strategy - Controls which asset accounts hold the fund's balance.
Checking Account - A required field. It is recommended to set this to the account that is going to be receiving the Stripe deposits when the fund receives online donations, as this makes it simpler to trace donation transactions. If the fund does not receive Stripe donations, set this to the account from which the fund typically writes grant checks.
Min Checking Balance - Sets a minimum floating balance that will be maintained in the checking account regardless of the investment strategy assigned to the fund. This is commonly used for operating funds to ensure a baseline cash balance is always available.
The Min Fund Balance and Override Balance Check fields are notification-based fields that will attempt to prevent you from overspending the fund.
Set Up Internal Controls for Grants and Vouchers
CommunitySuite provides approval controls at both the fund level and the system settings level. It is recommended to have at a minimum a grant approval policy in place so that the person posting a grant is not the same person approving it. This separation of duties is a key internal control. Voucher approval policies can also be set in the same manner.
Grant approvers and voucher approvers are set at the fund level. The approval percentage threshold is set in Grants Settings and Voucher settings and determines what percentage of approvers must approve before the grant or voucher can move forward.
Beyond grant approval, the following Grant Settings are also important to review:
Enable Guidestar - Allows your organization to run a charity check on a grantee to confirm Pub78 status before posting a grant. Canadian organizations should enable Grant Connect instead, which replaces Guidestar across the entire system.
Disable Charity Check With Additional Due Diligence - It is recommended to leave this unchecked. When unchecked, grantees must pass both Pub78 status and additional due diligence checks. Checking this box bypasses the additional due diligence step, which reduces the thoroughness of the charity check.
Show Grant Payable Swaps - Allows balance swaps to look beyond the accounts payable into grants payable. It is recommended to leave this unchecked for most organizations.
Scenario: All approvers are out of the office
If all available approvers are out of the office and a grant needs to be approved and paid, a potential workaround is for an administrator to move the grant back to the new bucket by unposting it, update the fund's approver list to include themselves, re-post the grant, and then approve the grant. It is recommended that organizations establish a policy for this scenario in advance so there is a clear, documented plan of action if an urgent payment needs to go out the door.
Scholarship Settings Recommendation
For organizations that process scholarships, it is recommended to enable Auto Approve at the scholarship program level. Scholarships have their own levels of review built into the process, and requiring approval at every stage, such as posting, approving, voucher creation, voucher approval, and check creation, creates unnecessary administrative burden.
Enabling auto approve streamlines the process while still allowing voucher or check-level approval if needed. It is also recommended to enable Disable Scholarship Swaps in scholarship settings to prevent balance swaps from unexpectedly moving cash out of investment accounts.
Set Up Designated Beneficiaries
For funds that consistently grant to the same organizations year over year, it is recommended to set up designated beneficiaries on the fund record under the Relationships tab. When a fund's spendable balance is processed, CommunitySuite can automatically generate grants to the designated beneficiaries based on the percentage of spendable assigned to each.
This is a useful internal control for ensuring that grants to consistent grantees are never accidentally overlooked. An alternative approach is to use recurring grants, though recurring grants are based on a fixed dollar amount rather than a percentage of the spendable amount.
Validate Your Configuration with Bulk Edit and Custom Reports
Reviewing fund settings across a large number of funds individually is time-consuming. Two tools are available to make this more efficient.
Bulk Edit - This provides a quick way to review and compare settings across all open funds simultaneously. Filters can be applied before clicking Bulk Edit to narrow the view to a specific subset of funds. It is recommended to use Bulk Edit at least once a year to verify that funds are still accurately categorized and configured. Bulk Edit Funds provides more information.
Custom Fund Reports - A custom fund report can pull nearly all fund settings into a single exportable view, making it easy to check whether all funds have the correct investment strategy, manage cash setting, admin fee account, endowed marker, and other key fields assigned. Create Custom Reports provides more information.
Configure General Ledger and Giving Hub Controls
General ledger controls and Giving Hub settings affect how transactions are recorded, reviewed, and processed across your CommunitySuite site. The recommendations below cover the most common settings that support clean recordkeeping and reduce audit risk.
Use Journal Entries Appropriately
Journal entries are a useful tool, but they are best thought of as a last resort to be used sparingly when no other system functionality exists to correct a general ledger issue. Before using a journal entry, it is worth confirming whether the correction can be made through standard system functionality instead. For example, a voucher entered with an incorrect date that is causing accounts payable to look unusual is better corrected by unposting the voucher and updating the date than by entering a journal entry.
When a journal entry is used, documentation of why the entry was made should be recorded both on the journal entry record itself and in a shared internal document so that there is a clear paper trail if an auditor asks.
Common legitimate uses for journal entries include correcting a transaction that cannot be fixed through standard system workflows and recording auditor-recommended entries such as fixed asset depreciation schedules. CommunitySuite does not automatically calculate asset depreciation, so depreciation entries provided by an external auditor are typically recorded as journal entries on a schedule throughout the year or at year-end.
Enable Journal Entry Approval
Journal entry approval works similarly to grant and voucher approval and includes the option to enable Disable Journal Entry Self Approval so that the person creating a journal entry is not the same person approving it. This separation of duties is an important internal control for general ledger changes. General Ledger Settings provides more information.
One of the most common auditor-requested reports is a journal entry report showing every journal entry made during the year and who created it. This report can be built using custom reports in CommunitySuite and should be available to produce on request.
Configure Donation Settings
The following donation settings are recommended to be enabled for most organizations:
Auto Tax Receipt - Automatically sends an email tax receipt to donors for every donation received through Stripe on the Giving Hub. This reduces manual processing work for donor services teams and ensures receipts go out promptly.
Tax Receipt Serial Numbers - Allows a PDF of the original tax receipt sent to a donor to be attached to the donation record. This creates a historical record of exactly what was sent to each donor and allows the original receipt to be referenced if needed. Generating a new receipt will replace the previous PDF and create a new serial number. This feature was originally designed for Canadian organizations where serial numbers on tax receipts are a legal requirement, but it provides useful documentation value for all organizations. This does not apply to yearly tax receipts.
Donation Review - Adds an additional review step to the donation workflow, creating a checkpoint for a second set of eyes on each donation. This setting does not block the posting of a donation or the sending of a tax receipt; it is an internal checkpoint only. It is recommended for organizations processing a high volume of donations, though it is worth discussing with your team whether the additional step fits your workflow.
Set Up Donation Types
Donation types provide an extra layer of categorization beyond payment methods, allowing organizations to tag donations by purpose or source. This is a more effective solution than maintaining separate contribution revenue accounts for the same purpose.
For example, within public securities donations, an organization might want to distinguish between stocks, real estate, or other asset types using donation types rather than separate accounts. Each donation type can be assigned its own revenue account, making it easy to run a custom donation report filtered by type and see those categories reflected on the income statement.
Review Giving Hub Settings
The following Giving Hub settings are recommended for most organizations:
Minimum Online Donation - It is recommended to set a minimum online donation amount to offset the impact of credit card processing fees on small donations. A minimum of $10.00 to $25.00 is common, though the right amount will vary by organization.
Giving Levels - Giving levels allow organizations to present suggested donation amounts to donors on the Giving Hub, making it easier for donors to select a gift amount. These are fully customizable and can include a range of amounts appropriate for your donor base.
Cover Credit Card Fee Percent - Enabling this option gives donors the ability to cover the credit card processing fee on their donation by increasing their gift amount by the fee percentage. It is recommended to consider this setting, as credit card fees can add up significantly for organizations with high online donation volume.
Donation Legal Terms - Allows organizations to present required legal language to donors before accepting an online donation. Organizations in states with specific legal disclosure requirements, such as Florida, should enable this setting. It is recommended to consult with a CPA or tax advisor for guidance on the appropriate language to use.
Set Up 1099 and 990 Reporting
Accurate 1099 and 990 reporting depends on three key configurations being in place before the reports are run: fund divisions, expense account settings, and vendor or profile records. Reviewing these settings proactively rather than at year-end reduces the risk of incomplete or inaccurate reports when they are needed most.
Configure 1099 Reporting
Three items must be in place for a vendor to appear correctly on the 1099 report:
Fund Divisions - Funds must be assigned to the correct division before running the 1099 report. Divisions can represent separate legal entities or affiliate organizations, and allow the 1099 report to be filtered and run by division. If divisions are not set up or funds are not assigned to the correct division, the report will not segment correctly.
IRS 1099 Field on Expense Accounts - Every expense account that should be included in 1099 reporting must have the IRS 1099 field set as NEC or a number field (MISC). This also connects back to the Chart of Accounts section of this article, setting up the IRS 1099 field on expense accounts proactively saves troubleshooting time at year-end.
Need 1099 on Vendor Records - Each vendor profile that should appear on the 1099 report must have the Need 1099 checkbox marked on their vendor designation. The 1099 report will only pull vendors who have this field marked.
When all three items are in place, every voucher posted to a correctly configured expense account for a correctly marked vendor will populate on the 1099 report. The 1099 report can be run by division and by IRS 1099 type. Clicking the profile ID in the report opens an expanded details page that allows you to view the specific check, voucher, and 1099 code associated with each entry if that level of detail is needed.
This is also the only place in CommunitySuite where the SSN field will appear if a vendor has a Social Security number attached to their record. 1099 Report provides more details on running a 1099 report.
Scenario: A vendor is not appearing on the 1099 report
If a vendor that should appear on the 1099 report is not populating, review all three settings above. Confirm that the fund the voucher was posted from is assigned to the correct division, that the expense account used on the voucher has the IRS 1099 field assigned, and that the vendor record has the Need 1099 checkbox marked. If all three of these items are set up correctly, this situation should not occur.
Configure 990 Reporting
990 reporting follows the same foundational logic as 1099 reporting; fund divisions must be set up, and funds must be assigned to the correct division before running the reports. CommunitySuite provides four separate reports corresponding to the four main parts of the 990 form.
Tax class on profile records can also map to 990 reporting. Assigning a tax class such as 501(c)(3), 509(a), or another applicable classification to grantee profiles allows that information to appear on the grantee view of the 990 report. Categorize Grantees Using Tax Class provides additional details on tax class reporting.
The 990 reports include the following:
- A donor view showing all donors who exceeded a specified amount in total contributions during the reporting period.
- A grantee view showing all organizations or individuals that received grants, including tax class and grant type where assigned. The organization and individual grantee reports are separate.
- A public support calculation report that can be configured by division, financial year, and number of trailing years to pull the support calculation figures needed for completing the 990 form.
Understand How the Affiliate Separate Entity Setting Affects 990 Reports
If your organization has set up divisions to represent affiliates, it is important to review the Separate Entity setting on each affiliate record. When Separate Entity is checked for an affiliate, the following reporting logic applies:
- Internal grants from an affiliate fund to a non-affiliate fund will appear as external grants on the 990 report.
- Internal grants from a non-affiliate fund to an affiliate fund will appear as donations on the 990 report.
If your affiliates are truly separate entities, it is recommended to have the Separate Entity setting checked so that the 990 report correctly reflects the relationship between those entities and the rest of the organization.