As June 30 approaches, business offices at independent schools are deep into preparations for year-end close. While this process is often viewed as a compliance necessity – reconciling accounts, preparing for audits, and finalizing reports – it’s also a powerful opportunity to assess institutional health, align financial practices with mission, and plan for long-term sustainability.

At NBOA Advisory Services, we believe that year-end close is more than a task – it’s a moment of strategic reflection. Here’s why:

1. Financial Reporting Is a Storytelling Tool

Your financial statements are more than numbers – they’re a narrative. They tell trustees, donors and regulators how your school stewards its resources. As you prepare for audit season, consider whether your expense allocations still reflect your current operations. Have new programs, staffing models, or campus changes shifted how resources are used? If so, your allocation methods may need to evolve to ensure transparency and accuracy.

2. Going Concern Isn’t Just for Struggling Schools

While most independent schools remain financially stable, the post-pandemic landscape has introduced new pressures: rising costs, shifting enrollment patterns, and the end of federal relief funding. Now is the time to stress-test your cash flow forecasts and evaluate your institution’s resilience. Are there early warning signs – like recurring operating losses or borrowing against endowments – that warrant deeper analysis? A proactive approach to going concern assessments can help leadership make informed, mission-aligned decisions.

3. Tax Compliance Is Broader Than You Think

It’s a common misconception that not-for-profit independent schools are largely exempt from tax obligations. In reality, schools are responsible for a wide range of tax filings – from Form 990 to payroll, state, and local taxes. Some may also face unrelated business income tax (UBIT) or foreign tax reporting requirements.

Even seasoned business officers often consult tax specialists to navigate these complexities. Resources like NBOA’s Tax Compliance Considerations for Not-for-Profit Independent Schools, developed in partnership with CliftonLarsonAllen, can help schools identify high-risk areas and ensure they remain in good standing. As you close the year, take time to review your school’s tax posture and ensure your compliance practices are up to date. It’s not just about avoiding penalties – it’s about protecting your school’s tax-exempt status and reputation.

4. Tax Incentives Can Fuel Strategic Investment

The Inflation Reduction Act has opened the door for independent schools to access clean energy tax credits – potentially transforming the economics of capital projects like solar installations or geothermal systems. These credits are now monetizable by tax-exempt entities, but claiming them requires planning, documentation, and timely filings. If your school is considering a facilities upgrade, now is the time to consult with your tax advisor and explore what’s possible.

5. The Audit Is a Partnership, Not a Hurdle

Auditors are not just compliance gatekeepers – they’re strategic allies. Engaging early with your audit firm can surface opportunities to strengthen internal controls, refine disclosures, and ensure your financial story is told clearly and credibly. This is especially important if your school is navigating complex issues like debt restructuring, program expansion, or significant changes in revenue streams.

Looking Ahead - How We Can Help

A smooth year-end close is not just about closing the books – it’s about opening a window into your school’s financial future. It’s a chance to align your operations with your mission, demonstrate accountability to your stakeholders, and position your institution for long-term success.

At NBOA Advisory Services, we don’t manage audits or year-end closes – but we do help schools look beyond them. Our team partners with independent schools to build long-range financial models, assess financial health and sustainability with clarity and confidence, and implement data-fueled dashboards for regular review and evaluation. If your school is ready to move from compliance to strategy, we’re here to help you chart the course.