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Year-end close typically means reconciling every bank and investment account to the general ledger, confirming pledge receivables and accrued expenses are recorded, verifying that restricted fund releases match actual program completion, and reviewing depreciation schedules — all before the books are “locked” so no further changes can be made without an explicit, documented adjustment.

For nonprofits, year-end close does double duty: it produces the audited financial statements the board and major funders expect, and it feeds directly into Form 990 preparation, since so many of the form’s financial disclosures come straight from the same year-end numbers.

Organizations that do real monthly closes — reconciling and reviewing every month rather than only at year-end — turn this into a much smaller lift, since most of the work has already happened incrementally instead of piling up into one stressful crunch alongside audit fieldwork.