It may be too soon to think about your personal New Year’s Eve plans, but now is the time that you and your accounting team need to start thinking about your year-end closing procedures. Closing out the books accurately allows you to start the new year fresh and organized, and ensures that you won’t have any surprises from Uncle Sam in 2018. This is the time of year when your team needs to be scouring the books to catch and correct any mistakes, prepare necessary documentation, and set up for success in 2018.
“Internal quarterly audits will prove to your team how to be proactive! This self-initiated step will help to alleviate the concern over loss profits and bring the huge benefit of “No surprises”! If you’re a fiscal calendar, then modify everything below during your last quarter! Says Sharon Tsao, CMO, Contemporary Staffing Solutions.
Critical Year-End Closing Procedures
These are the most important things your accounting team should be focused on to close out 2017 and get ready for 2018:
- Check in with the team that prepares the company tax returns. Ask for a comprehensive list of data, documents and other items they need for the tax filing process.
- Confirm (and then confirm again) that all revenues and expenses are recorded accurately and in the correct time frame according to General Accepted Accounting Principles (GAAP).
- Audit approval and authorization documents (expenses, bills, contracts, reimbursements, etc.) to ensure that they include the appropriate signatures.
- Pull year-end sales tax reports and confirm that you have paid all required sales taxes.
- Audit journal entry adjustments for accuracy.
- Reconcile all bank accounts, money accounts and credit accounts.
- Close out any temporary accounts like dividend accounts.
- In accordance with IRS form 940, match year-end payroll with monthly payroll taxes.
- Prepare a trial balance for the fiscal year-end.
Common Year-End Closing Mistakes To Watch For
End-of-year closing procedures are especially important if your team relies on third-party vendors. Never assume that a third party is handling your documentation properly. Your accounting and finance team will need to put on their auditor hats to ensure that all of your i’s are dotted and your t’s are crossed.
In addition to managing vendors, your internal A&F team must also remain committed to accuracy and thoroughness on their own end. Some of the most common year-end mistakes to keep an eye on include:
- Not starting early enough
- Reporting on incorrect or irrelevant data points
- Including too many account codes for P&L
- Not preparing quarterly forecasts
- Recording transactions incorrectly
- Reconciling accounts incorrectly
When it comes to accounting, one small mistake can trigger an audit or lead to large fines. Keeping your business compliant depends on the skill and work ethic of your accounting and finance staff. If your company is seeking top accounting and finance talent, or you want to improve your accounting and finance hiring processes, contact the expert A&F recruiters at Contemporary Staffing Solutions today.