The end of a financial period signals a critical phase for any business: the accounting close. This process, though complex, is vital for accurate financial reporting. We have compiled a guide to simplify this process. Remember, while this guide covers standard steps, it should be tailored to fit the unique aspects of your business. And if you need it, we’re happy to help you out!
1. Planning The Closing Of Your Accounts
Begin by collaborating with the finance department to set a timeline. Ensure you know when accounting information needs to be provided.
A detailed checklist for your annual close can prevent oversights, minimize errors, and help meet finance deadlines. It offers clarity and structure. For instance, consider including:
Physical and intangible assets: Check for expenses that should be amortized and ensure the depreciation method aligns with published valuation rules.
Investments: Verify actual ownership against shareholder registers and assess the need for impairment.
Inventory: Match physical inventory with accounting records, assess inventory for impairment, and check invoice cutoffs near closing dates.
Accounts receivable: Reconcile customer balances and assess the age of receivables for potential doubtful debts.
Do you want more examples? Check out our list of 23 questions to answer for your End-of-Year Financial Audit.
2. Booking Of All Accounting Documents
This includes invoices, bank statements, VISA statements, expenses, and closing entries like amortizations, provisions, and salary charges.
3. Analyzing Financial Statements
Compare the current balance sheet and income statement with previous periods to understand and justify variances.
4. Making Adjustments
After reviewing the balance sheet and income statement, record fiscal provisions and adjust profits or losses as needed.
5. Justifying Each Balance Sheet Item
Be prepared to support every entry with documentation or explanations, such as detailing pension provisions.
6. Preparing for External Audits
A comprehensive checklist can streamline audit preparation and follow-up.
7. Filing with the National Bank of Belgium (BNB)
Ensure all appendices, such as the list of directors and evaluation rules, are updated and in line with reality.
8. Closing and Opening Accounts
Close the current fiscal year and open the next, ensuring any post-closing audit adjustments are recorded.
9. Archiving Documents
Digitally archive all documents on a secure, backed-up network.
Every business has its peculiarities that must be considered during the closing process. By following these steps, you can ensure a smoother, more accurate close, enhancing financial visibility and reducing back-and-forth between finance and accounting.
Do you need additional accountancy support to help you close the year?