November 30, 2022
Getting Prepared for the Year-end Reporting: A Checklist
Are you ready for year-end?
The end of the fiscal year remains one of the most stressful periods for accounting teams. It is when the finance department has to prepare supplier reports, payroll year-end reports, and other financial reports. The accounting staff will take an average of 25 days to prepare the annual closing report. In addition, this period comes when the finance team must also prepare closing month reports, creating even more workload. Developing a solid plan that presents your workflow early in the year helps to reduce this pressure. To give you a head start, I have identified a workflow and some checklists necessary for a successful end-of-year closing process circle.
What makes end-of-year closing so challenging?
Preparing for the year-end accounting remains challenging. The foundation of a lasting solution is understanding the significant issues accounting teams face.
Human error. When we put together large piles of paperwork, mistakes are most likely to occur, leading to errors. Even for organized accountants, incorrect entries are typical and can lead to problems.
Missing invoices. Keeping track of all invoices can be a challenge. When some of these documents go missing, we are in for significant delays while reconciling the expenses.
Making Annual Closure Easier: Accounting Tips
- Prepare essential financial documents in advance.
Lacking an adequate plan with your crucial financial documents can be a source of pressure at the end of the year. The accounting team must prepare the necessary documents. These can include payroll accounts and other essential reports to prepare year-end books. A tip is to use accounting software to help integrate and analyze these documents.
- Collect outstanding receipts and invoices.
Your accounting team requires these documents to close the year-end books. One way to ease the process is to ensure the employees have all the invoices and receipts needed to make the end-of-year accounting reports. A vital tactic to speed up this process and avoid human errors is to automate your accounting system using software to generate digital receipts.
- Create a closing schedule and plan.
An effective plan must have schedules and timelines for completing every task. One way you can ease the pressure and workload during the period allotted to making the end-of-year closing reports is to identify priority activities, set dates for completion, and ensure adherence to these deadlines. First, categorize the tasks based on priority, then set deadlines, and complete the tasks within the target dates to ensure timely delivery.
- Reconcile accounts.
Your accounting team needs to reconcile all the asset accounts with all the transactions to ensure every item is ready for end-of-year closure. Reconciling every transaction ensures a match between the receipts, invoices, bank statements, and the transactions entered in the books. When your team reconciles the transactions, it reduces the chance of errors that may delay preparing the end-of-year report.
- Close and accrue accounts payable and receivables.
Comparing the incoming and outgoing finances is necessary to ensure consistent records. The accounting team must close these two accounts and cross-check to ascertain accuracy. After checking, you should ensure that your accounting team records any money owed as the year ends as credit in the income statements. Accounts payable should be recorded as liabilities.
When your business follows the above checklist, it will ensure smooth preparation for the end-year reporting and a good start for the next year’s accounting.
Our CPAs are available, and we have the knowledge, skill, and information that you need right now to address your accounting, tax and financial needs. Contact us today.
Amanda is the Marketing Director at Wilke CPAs & Advisors