If your financial year follows a calendar-year end, closing out the books on 2019 becomes top of mind in the New Year. There may be a lot of loose ends to wrap up and track down but by following some of the steps described below, finance departments can make the closing process a little bit easier.
Stick to the Calendar
Calendars are your friend when things get busy. Ideally, the finance team should have a working calendar that includes financial reporting due dates and deadlines. Sticking to the calendar will be key when it comes to wrapping up the year. If you do not have a calendar in place, consider developing one that the department, management and others “upstream” in your organization agree to follow and be held accountable.
Keep Track of Results in Real Time
As you move through the calendar, make a note of the actual results. All late entries should be tracked as a financial close key performance indicator (KPI) for a “post-mortem” discussion, as they may indicate the need for process changes.
Review Prior Year Late Entries and Previous Year’s Audit Entries
If the organization missed certain reporting entries or had any reporting areas cited in 2018, those areas should take priority as you close out 2019. A plan will be needed if they are repeat late entries or reporting areas in 2019.
Use Standardized Journal Entry Templates and Reconciliations
No need to get creative with journal entry reviews and reconciliations. The use of template can greatly expedite the review and compilation of financial reporting information. Finance departments should also consider capturing the information needed for footnotes when the reconciliation is performed. While taking this step may not necessarily speed up the close process, it can speed up the issuance of your organization’s financial statement.
Don’t Wait Until the Account Reconciliation to Review Journal Entries
Accounting departments that build a periodic and robust review of journal entries into their calendar and period-to-period workflow can expedite the account reconciliation process at the end of the year. Periodic reviews also minimize the risk of “surprises” during reconciliation.
Bring Your Auditor in for a Review
If you notice anything new, unusual, or an entry that required significant judgment, consider reaching out to your financial statement auditor. Your auditor may be able to review the specific items before you close, which could reduce the risk of those entries becoming more involved issues during the audit process.
Organizations that bring in an auditor to review specific items should include the auditor signoff dates on the close calendar and provide the close calendar to the auditors.
Change Timing for 2020
By the time you get to close, it’s too late to address some of the policies and procedures that could be making your 2019 reporting more cumbersome. Post-close is a good time to review your calendar and some of the timing decisions that fall within your control.
For example, if not already part of your financial reporting process, consider booking standard, recurring journal entries in the days leading up to year-end. Another idea is to book on a one-month lag (or based on estimates) where you can. Ask yourself if there are areas that can be booked based on November reconciled data adjusted for known December events. True-up your entry if the final December reconciliation (completed later in the close calendar) results in a materially different outcome. A list of all immaterial differences will be important for your financial statement auditor to review.
For More Information
For more about what finance departments can do to make their accounting easier, contact a member of our accounting advisory team here.
Published on January 14, 2020