Audit Instructions

1. Purpose

This document describes what a lay auditor generally reviews when auditing a smaller non-profit organisation – such as a student association, sports club, tenant-owner association, or similar body. It outlines the scope of the audit, a structured checklist of review items, and the documents and materials the auditor needs to request before starting.

A lay auditor is elected by the members at the general meeting. Unlike a chartered auditor in a large company, the lay auditor does not need formal accounting qualifications – but the assignment is nonetheless a serious one carrying both legal and moral responsibility. The audit protects the members' trust and the association's long-term financial health.

In a small organisation, all amounts are potentially material: an error of SEK 5,000 in a budget of SEK 500,000 (1 %) can be highly significant and should always be noted. A small association also often lacks the formal internal control structures found in larger organisations (approval procedures, separation of duties), which means the auditor must exercise independent, careful judgement.

The audit covers two distinct parts: a financial audit (review of the accounts) and an administrative audit (review of the board's governance). Both are required in order to assess whether the board should be granted discharge of liability at the general meeting.

2. Scope of the Audit – Review Checklist

The table below lists all items that make up a complete lay audit of a smaller organisation, together with a brief explanation of why each item is important.

What is reviewed	Why it matters
Part 1 – Financial Audit (Review of the Accounts)
Risk assessment Before the detailed review begins	Identify factors that increase risk: has the financial officer changed? Have finances changed significantly compared with last year? Does one single person control the entire financial flow (concentration risk)? The risk assessment determines where to focus attention.
Bank reconciliation Bank statement vs. balance sheet as at 31 December	The bank's own account statement must match exactly what the bookkeeping shows as the bank balance. This is one of the most fundamental checks: if they do not agree, there is either a bookkeeping error or something that requires explanation. All bank accounts must be reconciled separately.
Balance sheet balances Assets = Liabilities + Equity	The balance sheet must always balance: total assets must equal total liabilities plus equity. If it does not, there is a bookkeeping error in the closing accounts.
Result = Change in equity The most important arithmetic check	The net result for the year (surplus or deficit) must explain the change in equity from one year to the next. A surplus of SEK 10,000 means equity must increase by exactly SEK 10,000. If this relationship does not hold, it is a warning sign of accounting errors or entries made directly against equity.
Continuity check – CB year X = OB year X+1 The accounts thread must be unbroken	The closing balance of the reviewed year must match the opening balance of the following year, item by item in the balance sheet. This check is particularly important in associations where the financial officer changes every year, as knowledge can be lost in the handover. If balances do not agree, figures may have been altered without a traceable record.
Sample testing – supplier invoices Voucher list required as starting point	Select a representative sample of supplier invoices from the voucher list (typically the largest amounts plus random items). For each item: verify that a supporting document exists (invoice, receipt), that the amount matches, that the account code is reasonable, and that the invoice is addressed to the organisation (not a private person).
Sample testing – disbursements and payments Voucher list required as starting point	Check that outgoing payments match corresponding invoices and that no payments have been made to unusual recipients. Particular attention to payments made without a board resolution.
Sample testing – manual entries Voucher list required as starting point	Manual entries (accruals, corrections, period adjustments) are created directly by the financial officer without an external supporting document. They are necessary and legitimate, but also the entry type most susceptible to misuse. For each manual entry selected: what is its stated purpose? Is it reasonable?
Sample testing – specific accounts (e.g. rent) Account-focused check using general ledger	For a selected account (e.g. rent, account 5010), review all transactions during the year. Check that the number of payments matches the agreed rent period, that amounts are consistent, and that no irregular items appear on the account.
Receivables – age analysis of customer invoices Voucher list and accounts receivable ledger required	Unpaid customer invoices appear as assets in the balance sheet. If an invoice is never paid, this is in reality a loss that has not been recognised. Request the accounts receivable ledger and sort outstanding invoices by age: invoices older than 90 days are a warning sign; those older than 180 days should usually be written off.
Unusual transactions review Voucher list required as starting point	Scan the full voucher list for warning signs: round amounts without supporting documentation, duplicate amounts to the same supplier, gaps in number sequences (deleted vouchers may indicate a problem), entries very late in December or just after year-end, payments to private individuals not traceable to a board decision.
Multi-year comparative analysis At least two years: year X vs. year X−1	Compare revenue, costs, and equity across at least two years. Have any items increased or decreased dramatically? Is equity strengthening or weakening over time? Are there structural patterns (e.g. costs consistently exceeding revenue) that require attention?
Part 2 – Administrative Audit (Review of the Board's Governance)
Board meeting minutes – financial decisions	All significant financial decisions (larger purchases, loans, grants, authorised signatories) must be supported by a board resolution. Check that decisions are documented in the minutes and that the bookkeeping reflects what the board decided.
Activity report – governance review Annual report / activity report required	The activity report (or annual report) is the board's own account of what the association has accomplished during the year. The auditor checks that this description is consistent with what the accounts show, and that the board has acted in accordance with the association's statutes and the decisions of the general meeting. See section 5 for further detail.
Final Output
Audit report Written after all other items are complete	The written audit report is submitted to the general meeting. It covers: period reviewed, what was examined, conclusions on the financial audit, conclusions on the administrative audit, any observations, and the auditor's recommendation on whether to grant the board discharge of liability.

3. Required Documents and Materials

The following documents should be requested before the audit begins. Ask the financial officer if anything is missing – do not start the review until the core documents (income statement, balance sheet, bank statement, voucher list) are in hand. Always verify that the income statement and balance sheet have been printed at the same point in time and with the same last voucher number: if printed on different occasions, bookkeeping entered in between may cause the figures to diverge.

Document	What to check / why it is needed
Financial Statements
Income statement Year under review (year X)	Shows all revenue and costs during the year and the net result. Foundation for all comparative and equity checks.
Balance sheet Year under review (year X)	Shows assets, liabilities, and equity as at 31 December. Used for bank reconciliation, equity check, and continuity verification.
Income statement and balance sheet Previous year (year X−1)	Required for multi-year analysis and to verify that the opening balance of year X matches the closing balance of year X−1. Even if a comparison column exists in the year X report, a standalone copy is preferred.
Balance sheet Two years prior (year X−2), if available	Enables a three-year continuity and trend analysis. Particularly important when the financial officer has changed, as it helps establish whether figures are consistent across handovers.
Bank Documents
Bank statement / account summary All accounts, as at 31 December year X	The bank's own statement of balances for all accounts as at the closing date. Must match the corresponding bank account(s) in the balance sheet exactly. Request a summary for all accounts, not just the main account.
Annual securities statement For organisations with financial investments	If the association holds shares, bonds, or funds, request the annual securities statement from the bank or custodian (e.g. SEB annual statement as at 31 December). Compare the market value with the book value shown in the balance sheet. A significant difference between market and book value may require attention under the lower of cost or market principle.
Bookkeeping Records
Voucher list (transaction log) Exported from accounting system, full year	A complete list of every bookkeeping entry during the year: series, voucher number, date, amount, account, and description. This is not a physical folder – it is a digital report exported directly from the accounting system (e.g. Visma eEkonomi: Reports → General Journal → Export as Excel). It is the auditor's primary tool for selecting and performing sample tests.
Year-End Closing Appendices (Bokslutsbilagor)
Accounts receivable ledger (customer ledger)	A list of all outstanding customer invoices with invoice date, amount, and payment status. The total must match the receivables figure in the balance sheet. Sort by age to identify invoices older than 90 or 180 days.
Tax account statement If applicable	Statement from the Swedish Tax Agency showing the association's tax account balance as at year-end. Verify this matches the tax account balance in the balance sheet.
Specification of prepaid expenses Accruals – costs paid in advance	A list of costs that have been paid before year-end but relate to a future period (e.g. insurance paid in December for January–December next year). Verify that the specification adds up to the prepaid expenses item in the balance sheet.
Specification of accrued income Income earned but not yet received	Income that has been earned before year-end but not yet invoiced or received (e.g. event held in December, invoice not yet sent). Verify that the amounts are reasonable and will actually materialise as cash.
Tax allocation reserve If applicable	Specification of any tax allocation reserve (periodiseringsfond), if the organisation has set one aside. Verify against the balance sheet.
Accounts payable ledger (supplier ledger)	A list of all unpaid supplier invoices as at year-end. The total must match the accounts payable figure in the balance sheet. Check for unusually old unpaid invoices.
Project income statement For organisations running separate projects	If the organisation runs one or more separately tracked projects (e.g. events funded by earmarked grants), request a project-level income statement showing revenue and costs per project. Verify that grant conditions have been met.
Accrued expenses and deferred income	Costs incurred before year-end but not yet invoiced (accrued expenses), and income received in advance for a future period (deferred income). Verify amounts and that they are reasonable.
Other Documents
Budget If one was adopted for the year	Compare actual results with the budget approved by the general meeting. Large deviations should be explained by the board.
Board meeting minutes Financial decisions during the year	Minutes from board meetings where financially significant decisions were made (larger purchases, loans, grants, new contracts, changes to authorised signatories). Verify that these decisions are reflected in the accounts.

4. The Voucher List – the Auditor's Primary Tool

The voucher list (also called the general journal or transaction log) is a digital report exported directly from the accounting system. It lists every bookkeeping entry made during the year: series, voucher number, date, amount, account code, and description.

It is not a binder of physical documents – it is a structured log the financial officer exports in a few minutes. In Visma eEkonomi: Reports → General Journal (Grundbok) → Export as Excel.

How to use the voucher list Open the exported file in Excel. Sort by series to understand the structure: which series contains supplier invoices (often A), customer invoices (often K), manual entries (often M), or cash register data (often Z)? Ask the financial officer to confirm what each series represents. Then select a sample: the largest amounts, some random items, and all entries in series with very few items (e.g. only 1–5 entries). For each selected entry, verify that a supporting document exists and that the amounts and account codes are correct.

5. Activity Report – Required for the Administrative Audit

To carry out the administrative audit (review of the board's governance), the auditor needs the association's activity report (Swedish: verksamhetsberättelse).

The activity report is the board's own account of what the association has done during the year: which activities were carried out, how the mission was fulfilled, and what significant decisions were made. Smaller non-profit organisations that are not required to prepare a formal annual report (such as those below the 3 million SEK threshold) have no statutory obligation to produce a formal management report – but they typically produce an activity report that is presented and adopted at the general meeting.

What the auditor checks against the activity report The activity report is assessed against: the association's statutes (has the board acted within its mandate?), decisions from the previous general meeting (has the board done what it was instructed to do?), and the accounts (is what the board claims to have done consistent with the financial transactions visible in the bookkeeping?).

Without an activity report, the administrative audit cannot be completed. If no activity report has been prepared, this should be noted in the audit report, and the board should be asked to provide a written summary of the year's activities before the general meeting.

6. Materiality and Internal Control

Materiality

In a large organisation, auditors calculate a formal materiality threshold – an amount below which individual errors are not reported because they do not affect the overall picture. In a small association, all amounts are potentially material: with a budget of SEK 500,000, an error of SEK 5,000 (1 %) can be significant and should always be noted (Bokforingsnamnden, n.d.).

Internal control

Larger organisations have systems of internal control: approval procedures, dual authorisation for payments, and clear separation of duties. In many smaller associations, a single person handles the entire financial flow – recording transactions, approving them, and making payments. This concentration risk is not necessarily a sign of dishonesty, but it means the auditor must take a more independent and thorough approach to sample testing.

If the financial officer changes every year (common in student organisations), this further increases the risk of errors through loss of institutional knowledge during the handover. In such cases, the auditor should request documentation covering at least two years back.

Audit Instructions for Smaller Organisations