YEAR-END ACCOUNTING PROCEDURES | Audit. Tax. Advisory

What is Year-End Accounting

Year-end closing entails the process of updating and inspecting accounting records “books” at the end of a financial year. The process is crucial in the final company financial reporting process.

The year-end closing procedures detect any deficits and balances in the company books which are recorded and carried forward to the new financial year. This enables the company project a realistic budget based on the actual figures in the past year. Mastery of year-end closing procedures ensures that the financial health of the company is well maintained.

Challenges of Year-End Closing

The year-end closing process is challenging for most accounting department. In operation, most organizations are exposed to accounting weaknesses as a result of gaps in level controls within the company. Accountants must complete the day-to-day tasks on transactions alongside the year-end closing procedures. It is therefore important that the finance personnel prepare a year-end work plan to achieve critical milestones within the exercise.

Key Components of Year-End Closing Procedures

Effective accounting procedures are a fundamental part of running a successful business and a main component dedicated to providing reliable financial data and reports. With proper planning and the right tools, however, the accounting department can complete the closing process in less time and reduce the risk of errors.  companies can use technology to scale the business. To create a smoother process, start with the end in mind.

It is therefore critical that key finance personnel in the company are well acquainted with the key components of year-end closing procedures that have a major impact in organizations as follows:

  1. Ensure the accuracy of financial reports that present true and fair view of the state of the business.
  2. Ensure effective financial management in the company.
  3. Detect and correct accounting errors and miscalculations that may be overlooked.
  4. Validate the accuracy of the ledger balances transferred from one financial year to another.

Areas of Focus End-Year Accounting

We partner with clients to ensure observance of year-end closure procedures as well as train key company finance personnel on mastery of year-end closure procedures to ensure the financial success of the company. Our areas of focus are:

  1. Development of a closing schedule highlighting activities that must be covered before the end of the fiscal year.
  2. Examination and recording of assets vis-à-vis a physical verification exercise
  1. Reconciliation of outstanding invoices and receipts.
  2. Reconciliation of critical transaction vis-à-vis supporting documents i.e., bank statements and invoices.
  3. Proper accrual of accounts receivables and payables.
  4. Conduct a closure of the accounts receivables and payables.

You can reach Ronalds Auditors/ Corporate Trainers via our email info@ronalds.co.ke and at our corporate offices at 136, Manyani East Road, Off Waiyaki Way.

Related: Internal Audit and Corporate Governance

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