Detailed Year-End Financial Close Out Checklist
Basic Reconciliation Reminders
- Balance Sheet Accounts – most important
- Bank & Credit Card Accounts – verify accuracy of transactions
- Prepaid Insurance & Payroll Accrual – doublecheck for compliance adherence
- Revenue Account – where point of sale is used to record revenue
Detailed Checklist
- Summarize close results and collect supporting documents. (It may be advisable to create a new Close Period record in your accounting system).
- BS & PL accounts should be checked for corrected debit or credit balances and activity.
- Confirm balance sheet with prior year’s tax return.
- Aged Accounts Receivables – review for any write-offs or collection actions.
- Aged Accounts Payables – review for any necessary adjustments.
- Be sure that bank and credit card transactions match up, and reconcile all bank accounts.
- Run Customer Balance Detail Report to check for payment or credit discrepancies.
- Reconcile deposits, prepaids and any asset accounts. Check off debits and credits that wash against each other, using an ending zero balance. Access a detailed report of accounts through the end of the period which shows only unreconciled transactions responsible for balance.
- Year-End Inventories - Check for inventory errors by running an Inventory Asset Value against Inventory Valuation Summary report.
- Undeposited Funds Account balance should be zero. If not, investigate if any payments were not deposited, not logged correctly, or lost.
- Fixed Asset activity should confirm that any accumulated depreciation is being properly recorded.
- Capitalization – confirm and document all large purchases. Record any adjustments relating to fixed assets.
- Run Accounts Payable against detail report and run Vendor Unpaid Balances Report. Check for errors regarding credit card transactions, and payments and credits not properly logged.
- Liabilities - Loans payable, and any other liability accounts such as payroll and sales tax should be reconciled. Verify that the principal and interest have been properly allocated (and that no interest payments have been applied to principal).
- Verify sales/use tax liabilities by running taxable sales report and confirm that the correct tax was collected.
- Payroll liabilities should match payroll reports. Balance due at end of period for taxes and deductions should be ready to go on the pay schedule for the next period.
- Reconcile payroll expenses against payroll reports.
- Run detailed credit card liability reports through the period end, and customize report to reveal any un-reconciled entries, save as detail of balance due.
- Verify that wash/suspense accounts are zero.
- Opening Balance Equity Account should be zero. Review reasonable balances and activity and accounts based on entity type.
- Reclassify uncategorized transactions.
- Verify that transactions posted to parent accounts have not been posted to sub-accounts.
- Personal vs. Business Transactions – review for classification accuracy
- Relief Funds – verify you have accurately recorded any funds from Coronavirus Aid, Relief, and Economic Security (CARES) Act.
- Archive copies of Balance Sheet and P&L.
- Set closing date and send to CPA.
- Update Adjusting Journal Entries from CPA to your files.
Financial Statements Prepared by CPA:
- Balance Sheet
- Income Statement
- Cash Flow Statement
- Budget vs. Actuals
CPA Client Review Checklist
Review Each Client for Profitability & Out of Scope Activities:
- Time on Client vs. Time Budget for Client
- Run Client Job-Costing Reports
- Calculate Listing Margins on Fixed Fee Clients
- Calculate Time on Out-of-Scope Activities vs. In Scope
- Analyze Unbilled, Out-of-Scope Activities
- Update Engagement Letter if Needed
- Discuss Service Changes with Clients & Provide New Engagement Letter
- Offboard Appropriate Clients
