At KCG, we have vast experience with our team members going through hundreds of monthly and annual close processes over the years, and we know it can be a busy time, especially if you have to contend with an annual audit as well. Here are some of our best practices that will help you think through your close process:

YEAR-END CLOSE 

1. Create and use a close calendar and perform a detailed analysis walkthrough with the various stakeholders in the Company to ensure alignment and coordination of requirements for close.

2. Prepare an account reconciliation for every account, even accounts with no activity.

3. Prepare activity roll-forwards for accounts receivable and bad debt reserve balances.

4. Reconcile annual employee payroll costs to third-party summary payroll reports.

5. Assess your reserves from a fresh perspective to ensure compliance with the historical approach and appropriateness based on current circumstances.

6. Document the accounting for unique, non-recurring, and significant accounting transactions in the form of white papers and provide them well ahead of the audit to proactively engage your auditor.  

7. Internally perform post-close disbursement testing to be ready for auditor inquiries.

FINANCIAL REPORTING

Create a base financial statement package for management and auditor comments in advance of the year-end close process. Be sure to highlight fundamental changes and provide a disclosure checklist for any significant accounts to support the completeness of the disclosures.

Get Ready for the Audit  

• Ensure that any reliance on third-party reports (valuations, etc.) are adequately understood, inputs are verified, and calculations re-performed where appropriate for your controls.

• Proactively manage the auditors, take ownership for timelines and objectives – request weekly status reports/meetings to understand progress.

• Compile your financial statement tie-out in a hard copy binder with copies of all information to support your financial statements and disclosures.