Closing Year-End Books - Top five things to do

With the year end wrapping up, we are often asked what are some tasks a company should do to close out their year-end books?  Below are the top five things a company can do at the end of each year.  These processes inherently include the added benefit of preparing a company for an audit.  

  • Complete a Checklist – Company's should keep a monthly, quarterly, or annual checklist (based on need and requirement) of recurring adjustments that have to be made.  Each period, the person in charge of the books should make the scheduled entries and complete the checklist.  This will help keep a consistent and accurate close process. 
  • Bank Accounts - Reconcile your bank accounts and investigate any checks outstanding over 2-4 weeks.  Proper reconciliation of bank accounts ensures that your cash activity is captured accurately. Regular reconciliation of a company’s cash account can help a company find, catch, and consequently investigate any differences for which the company can then follow up on. Don’t forget to reconcile credit cards and investment accounts as well.
  • Inventory Count – If you have inventory, conduct an inventory count.  If you get an annual audit, or may get one in the future, ensure that you invite the auditor.  Make sure to document the count process and keep records of the count.  
  • Cap Table – If you keep books on an accrual basis and are required to adhere to US GAAP, update your cap table and book non-cash entries. The errors we find most often are non-cash related: stock compensation, stock option expense, discounted debt, etc...Most of these adjustments should be included in your checklist mentioned above.
  • Analytics – This is probably the easiest way to catch errors before they occur. Look at your balance sheet and income statement against what you expect and/or prior year and investigate any anomalies at a more granular level.  Comparing results to prior period numbers can also help companies internally measure performance as compared to previous benchmarks.

Here is to a successful year end close!

dbbmckennon is a full service CPA firm with offices in Orange County, San Diego and Santa Monica.  We specialize in companies filing with the SEC and utilizing equity crowdfunding through Reg A+ and Regulation Crowdfunding. For additional complimentary information regarding this topic or other questions you may have please call one of dbbmckennon‘s offices located in Southern California or contact us here.