A timely reminder for those involved in the year-end closing process begins with establishing and documenting a process which includes overall timing, rationale, and format of the annual financial statement closing process. This process should be reviewed annually in conjunction with authoritative guidance and regulations affecting the organization so that any procedures or accounting policies may be revised as needed.
Specific steps in year-end close should include the following:
• Knowledgeable personnel reviewing significant judgments and estimates used in the financial records and preparation of supporting analysis for nonroutine transactions and events;
• Departmental signoffs indicating review of relevant financial information and disclosures at each level;
• Management’s review of budget to actual comparisons, including investigation of significant variances;
• Timely analysis and reconciliation of unusual items and exceptions;
• Management’s review of a detailed schedule of all related party transactions and events;
• Independent review and approval of all journal entries and the supporting documentation ;
• Each financial statement disclosure should have a supporting analysis and documentation in accordance with generally accepted accounting principles; and finally,
• An independent review of the financial statements by management and/or other personnel having the necessary skills, knowledge and expertise to ensure consistency, completeness and compliance with generally accepted accounting principles as well as the organizations’ own accounting and disclosure policies.