Month end close
Preparation
Accruals
- Review the financial statements and identify any expenses or revenues that should be accrued for the current month.
- Record the necessary accruals in the accounting system, ensuring accurate amounts and proper expense or revenue classification.
- Gather invoices, contracts, or other relevant documents that support the need for accruals.
- Obtain approval from the responsible department or manager for each accrual before recording it.
- Review the previous month's accruals and compare them to the actual expenses or revenues incurred.
- Identify any adjustments or corrections needed to accurately reflect the expenses or revenues in the current month.
- Review outstanding invoices, contracts, or other documents to determine the amount of expenses or revenues to accrue.
- Record the appropriate accruals in the accounting system to reflect the outstanding amounts.
- Compare the balances of the accrual accounts in the general ledger with the balances calculated from the accruals.
- Reconcile any differences and ensure the accuracy of the accrual balances.
- Verify that each accrual is coded correctly according to the chart of accounts.
- Classify the accruals under the appropriate expense or revenue category to ensure accurate financial reporting.
- Identify any accruals that are significant or unusual, based on their amount or nature.
- Obtain approval from higher-level management or the finance department before recording these accruals.
- Create a document or spreadsheet that explains the reasoning behind each accrual and the calculations used to determine the amounts.
- Save this documentation for future reference or audit purposes.
- Notify the relevant stakeholders or departments about any significant accruals or changes that may impact their budgets or financial plans.
- Provide them with the necessary information and answer any questions they may have.
- Review all accruals to ensure accuracy, completeness, and proper documentation.
- Make any necessary adjustments or corrections before closing the month-end period.
Use in Manifestly