Rose Report: Issue 30

How to Ensure a Seamless, Successful Year-End Close

The start of 2017 is less than a month away, which means it’s time for firms to prepare for their annual year-end close. While these typically take place in January and February, it is crucial for companies to make sure they’re taking the necessary steps to properly close out the fiscal year. This benefits the entire company, as it provides an overall view of the company’s financial health and year-to-year growth. Here are a few best practices for accountants to keep in mind when closing out the year.

Year-end close procedures include the same steps as monthly closings, with some additional requirements. For example, a firm should be prepared for an annual audit or review regardless if one is scheduled. Make sure you have access to all the necessary underlying documentation on hand, as it’s important for leaders of the company to be well-prepared for a potential audit. Auditors might request certain schedules, but if those schedules have been prepared and updated monthly, this should be a straightforward process for the company.

Keep in mind that at the end of the year, accuracy trumps timeliness. Throughout the year, when a company needs to focus on day-to-day operations and keep the business running, timeliness is paramount. It is important to give executives timely feedback so they can react to changes as they are occurring. But at the end of the year, additional stakeholders evaluating the company often look at these year-end numbers, as these provide a snapshot of the company’s financial standing and will be used as a benchmark for the future. That’s why it’s crucial to be more focused on the accuracy of management estimates at the end of the year—especially because mistakes at year-end are more likely to find their way into tax returns and other important filings.

The best way to ensure a seamless and successful year-end close is to make sure your firm is accurately managing the books all year. To avoid an overwhelming and stressful close, at the end of each month, financial professionals should reconcile all bank accounts, ensure that accounts payable, accounts receivable, and subsidiary ledgers for all assets and liabilities are reconciled. Monthly income statement accounts should also be reviewed, analyzed, compared to the budget, and determined to be accurate. Quarterly reconciliation of your 941’s to the G/L will assist with the year-end reconciliation of W-3/W-2’s, 941’s and the G/L as well.

Year-end close procedures don’t have to be intensive—as long as you plan ahead and establish a consistent approach, companies can make sure this final task is executed smoothly and successfully.


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