Financial Closure Protocols

Basic Accounting Monthly Closing Checklist: Monthly Closing Checklist 1. Bank Reconciliation:  - Review and reconcile bank statements.  - Verify outstanding checks and deposits. 2. Journal Entries:  - Record adjusting entries for accruals and deferrals.  - Update depreciation for fixed assets.  - Adjust prepaid expenses and unearned revenue. 3. Accounts Receivable:  - Reconcile accounts receivable.  - Verify the allowance for doubtful accounts. 4. Accounts Payable:  - Reconcile accounts payable.  - Confirm the accuracy of recorded expenses. 5. Payroll:  - Review payroll transactions for accuracy.  - Confirm tax withholdings and other deductions. 6. Fixed Assets:  - Update fixed asset registers.  - Record disposals or additions to fixed assets. 7. Inventory:  - Verify physical inventory against recorded amounts.  - Adjust inventory levels as needed. 8. Liabilities:  - Confirm all liabilities are recorded.  - Reconcile outstanding loans or credit balances. 9. Expense Review:  - Review all expenses for accuracy and proper classification.  - Confirm that all incurred expenses are recorded. 10. Revenue Recognition:  - Confirm proper recognition of revenue.  - Review deferred revenue and recognize as appropriate. 11. Financial Statements:  - Generate financial statements (Income Statement, Balance Sheet, Cash Flow Statement). 12. Analysis:  - Analyze financial statements for trends and anomalies.  - Conduct variance analysis against budget/forecast. 13. Closing Entries:  - Close temporary accounts (e.g., revenue, expenses) to retained earnings. 14. Documentation:  - Ensure all supporting documentation is filed appropriately.  - Maintain a clear audit trail for all transactions. 15. Backup and Security:  - Backup financial data and store it securely.  - Review access controls and restrict as necessary. 16. Final Review:  - Perform a final review of the entire closing process.  - Confirm all necessary steps have been completed accurately. 17. Reporting:  - Share financial reports with relevant stakeholders.  - Address any queries or concerns. 18. Compliance:  - Ensure compliance with accounting standards and regulations.  - Document any changes in accounting policies or practices. 19. Future Planning:  - Identify areas for process improvement.  - Plan for upcoming months and potential challenges. 20. Audit Preparation:  - Prepare for internal or external audits.  - Document any issues or areas of concern for follow-up.

Month-End Financial Close Checklist ✅ 🔹 Accounts Receivable (AR) ✔ Reconcile invoices & payments ✔ Send outstanding invoices to customers ✔ Follow up on overdue balances ✔ Adjust for bad debts if needed ✔ Review AR aging report 🔹 Accounts Payable (AP) ✔ Verify & reconcile vendor invoices ✔ Record all bills for the period ✔ Process due payments ✔ Review AP aging report for overdue amounts ✔ Accrue unpaid invoices for received services 🔹 Bank & Cash Reconciliation ✔ Reconcile bank statements ✔ Match cash receipts & payments with ledger ✔ Investigate and resolve discrepancies 🔹 Revenue & Expenses ✔ Match revenue with invoices ✔ Record unbilled revenue ✔ Accrue expenses not yet recorded ✔ Ensure correct expense categorization 🔹 Fixed Assets ✔ Record asset purchases, sales, or disposals ✔ Update depreciation schedules & post entries ✔ Conduct physical verification, if applicable 🔹 Payroll ✔ Review payroll journals & post entries ✔ Reconcile payroll accounts, including taxes & benefits ✔ Accrue unpaid salaries or bonuses 🔹 Inventory ✔ Reconcile balances with physical counts ✔ Adjust for shrinkage if needed ✔ Update cost of goods sold (COGS) 🔹 General Ledger (GL) ✔ Post all journal entries ✔ Reconcile sub-ledgers with the GL ✔ Review trial balance for errors ✔ Resolve any suspense account entries 🔹 Accruals & Provisions ✔ Record month-end accruals for income & expenses ✔ Review provisions for taxes, warranties, contingencies 🔹 Taxation ✔ Review & file monthly tax returns (GST, TDS, etc.) 📌 Final Step: Review financials for accuracy before closing the books! #Accounting #Finance #MonthEndClose #FinancialManagement

Month-End Closing - Accounts Payable (AP) The AP Month-End Closing process ensures that all liabilities are recorded accurately and financial statements reflect the true state of payables. Below are the detailed steps involved:- 1. Receive and Process Invoices: • Ensure all vendor invoices for the month are received. • Match invoices with purchase orders and receiving reports (3-way match). • Enter all approved invoices into the AP system before cut-off. 2. Review and Accrue Unreceived Invoices: • Identify goods/services received but not yet invoiced. • Prepare accrual journal entries for these expenses. • Validate with GR/IR (Goods Receipt/Invoice Receipt) or open PO reports. 3. Reconcile Vendor Statements: • Request and review vendor statements. • Match vendor balances with the AP ledger. • Investigate and resolve discrepancies (e.g., missing credits or invoices). 4. Verify Payments Posted: • Ensure all issued payments (cheques, wires, ACH) are recorded. • Match payments to invoices and clear them in the system. • Void or reissue any returned or rejected payments as needed. 5. Reconcile AP Subledger to General Ledger (GL): • Run AP subledger aging report and compare it to the GL AP balance. • Investigate and resolve any variances (timing issues, posting errors). 6. Clear Advances and Employee Reimbursements: • Settle any employee advance payments. • Ensure employee expense reports are approved and posted. 7. Run AP Aging Report: • Generate detailed aging reports (Current, 30, 60, 90+ days). • Review overdue balances and follow up for resolution. 8. Review Debit Balances: • Identify and investigate negative balances (credit memos or overpayments). • Adjust or apply to future payments. 9. Close AP Period in ERP System: • After validating all entries, close the AP module for the month. • Prevent further posting to that period. 10. Communicate and Archive: • Share closing reports with Finance and Accounting teams. • Archive month-end documentation for audit and compliance. Optional Reports to Run • Vendor Aging Report • Unpaid Invoice Report • GR/IR (open GRN) Report • AP Trial Balance • AP Accrual Report • Payment Register #accountspayable #AP #P2P #PTP #STP #monthend #monthendclosing #periodclosing #accruals #provision

Monthly End Closing Checklist | Best Practices for Finance Teams A strong month-end close is critical to maintaining financial accuracy, ensuring compliance, and supporting strategic decision-making. Here’s a streamlined checklist every accounting and finance team should follow: ⸻ 1. Reconcile Bank Accounts • Match bank statements with internal company records. • Investigate and resolve discrepancies. 2. Reconcile Credit Card Accounts • Verify credit card transactions against internal records. • Identify and address any inconsistencies. 3. Accounts Receivable Management • Issue all customer invoices timely. • Follow up on overdue accounts. • Write off confirmed bad debts appropriately. 4. Accounts Payable Management • Enter all supplier/vendor invoices. • Process pending supplier payments. • Review and adjust accrued liabilities. 5. Payroll Reconciliation • Ensure payroll transactions are accurately recorded. • Reconcile payroll taxes and benefits obligations. 6. Fixed Assets Update • Record all asset acquisitions and disposals. • Update and apply depreciation schedules. 7. Inventory Management • Conduct physical inventory counts (if applicable). • Reconcile inventory values with accounting records. 8. Prepaid Expenses Adjustment • Record amortization of prepaid expenses. • Prepare entries for newly incurred prepayments. 9. Accruals and Deferrals • Book necessary accruals for expenses and revenues. • Ensure proper period recognition for all transactions. 10. Financial Reporting • Prepare Profit & Loss (P&L) Statement. • Generate Balance Sheet and Cash Flow Statement. • Compare actual performance against budgeted forecasts. 11. Review and Adjust Journal Entries • Validate journal entries for accuracy and completeness. • Post required adjusting entries to the General Ledger. 12. Backup Financial Data • Securely back up all financial records and sensitive data. 13. Management Review and Analysis • Present finalized financial statements to management. • Discuss variances, trends, and any material concerns. ⸻ Key Takeaway: ✔️ A disciplined monthly close improves financial transparency, strengthens internal controls, and empowers strategic business decisions. ⸻ #accounting #finance #financialreporting #monthendclosing #closingchecklist #accountsreconciliation #corporatefinance #financialanalysis #accountingbestpractices

SAP S/4HANA Advanced Financial Closing (AFC) is a set of functionalities within SAP S/4HANA designed to streamline and accelerate the financial closing process. AFC leverages automation, real-time data processing, and advanced analytics to improve the efficiency, accuracy, and transparency of financial closing activities. Here's an overview of SAP S/4HANA Advanced Financial Closing: Period-End Closing Cockpit: The Period-End Closing Cockpit provides a centralized interface for managing and monitoring the financial closing process. It allows finance teams to define closing tasks, assign responsibilities, set deadlines, and track progress in real-time. The cockpit provides visibility into the status of closing activities, identifies bottlenecks, and enables proactive issue resolution. Task Automation: SAP S/4HANA AFC automates repetitive and manual tasks associated with financial closing, such as journal entry postings, intercompany reconciliations, and account reconciliations. Automation reduces the time and effort required for closing activities, minimizes errors, and enhances process efficiency. Real-Time Analytics: AFC leverages real-time analytics capabilities to provide insights into financial data, trends, and anomalies during the closing process. Finance teams can perform variance analysis, identify outliers, and make data-driven decisions to optimize closing procedures and address issues promptly. Parallel Accounting: SAP S/4HANA supports parallel accounting, allowing organizations to perform financial closing activities for multiple accounting principles or standards simultaneously. This feature is particularly useful for companies operating in multiple countries or industries with diverse regulatory requirements. Integration with SAP Analytics Cloud (SAC): SAP S/4HANA AFC integrates with SAP Analytics Cloud (SAC) to provide advanced reporting and visualization capabilities for financial closing data. SAC dashboards and reports offer insights into key performance indicators, financial metrics, and closing process performance. Compliance and Audit Readiness: AFC helps ensure compliance with regulatory requirements and accounting standards such as IFRS and GAAP. The solution supports audit readiness by maintaining an audit trail of closing activities, documenting procedures, and facilitating internal controls. Predictive Analytics and Machine Learning: SAP S/4HANA incorporates predictive analytics and machine learning capabilities to forecast financial outcomes, identify patterns, and optimize closing processes. These technologies enable proactive decision-making, risk management, and continuous improvement of financial closing activities. Overall, SAP S/4HANA Advanced Financial Closing enhances the efficiency, accuracy, and transparency of financial closing processes, enabling organizations to achieve faster close cycles, improve decision-making, and drive business performance.