If you are looking forward to taking some time off during the holidays, you will probably be concerned with the long list of tasks you need to complete before and after your vacation, such as those related to the year-end close. Your ability to enjoy that time off might also be tainted by the fact that you’re worrying about work to-dos. In my career as an accounting professional, I have always been involved in the year-end close, yet managed to stay away from the office during the holidays. Before asking for the days off, I refined what I thought was the perfect plan to ensure the year-end close would not fall apart. But, it wasn’t only about convincing my boss that I had everything under control, it was more about my peace of mind. I did not want to be at the dinner table with my family having a conversation about my employer’s external audit team, or the massive data I had to work with to reconcile the accrued expenses account. I wanted to leave the office around December 20th and not have to think about it until January 3rd. Here is my perfect plan for accomplishing my mission:
- Keep your audit team engaged throughout the year. I know some of us would love to say good-bye to our auditors in the first quarter of the year and not see them again until 12 months later. I always dreamt of that myself. However, keeping them close might actually be a better approach. This is especially helpful if your firm is constantly exploring new transactions, revenue streams, or simply is in an industry where frequent changes are common. Engaging your auditors in these new transactions will help you address any inherent accounting issues early, rather than during the year-end audit crunch. And since it’s just the beginning of November, you still have some time to catch up.
- Are you reconciling your balance sheet accounts on a monthly basis? If the answer to this is no, start now. I believe unreconciled balance sheet accounts, or unsupported balance sheet transactions, are the most painful items during an audit. Someone in your team, and your team alone, will have to bring these up to date during the audit. This is truly a very simple process to implement, and the maintenance of the reconciliations is even simpler. The problem is when a reconciliation is not done for months and then everyone is too afraid to tackle it, in which case, the reconciliation is forgotten until your auditors ask you for it.
- Ensure there is a name next to each task on your year-end closing checklist. If you are asking yourself what is a year-end closing checklist then you are in big trouble. In any case, your year-end closing checklist should just be an extension of your monthly closing checklist. Go through this checklist now and see if it is representative of all the tasks your team, or others outside your team, will need to complete in order to close the books. Clean it up for any task no longer required, and update for any new tasks added to the process during the year. A very important last step is to ensure that each task has an appropriate owner. This is the person who can actually get the task to completion, by either performing it or leading the efforts.
- Get an update PBC list from your auditors. I’d say get this in early November. This way you have a couple of months to review the list and go back to the auditors with questions before they go on vacation themselves. It also allows you time to assess what’s going to require extra effort to complete, and find an owner for each of the items on the list. Review this list in conjunction with the year-end closing checklist as many items will appear in both. Also, the PBC list might bring to light tasks that should be part of your year-end closing checklist, but that have been left out.
- Enjoy the office holiday celebrations. Be part of and engage your team in all the festivities taking place in the office! This is good for teambuilding and to relieve some of the stress the year-end close and audit brings. These gatherings are also good opportunities for individual team members to express any concerns they have about the year-end close in an informal setting, which sometimes leads to more open conversations.