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Month End Close Checklist

A comprehensive checklist to organize your month- end close tasks and wrap up your close. Better, smoother and faster.

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A comprehensive guide for accountants and bookkeepers.

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Month-end close

Month-end close

Month end close

Every organization must have its account staff complete the month-end close process to avoid unforeseen financial complications. The month's end closing, also known as the month-end close, is typically a busy and time-consuming period. However, producing accurate and reliable financial data is essential for any business because it is one of the cornerstones of its long-term success.

What is the month-end close?

The month-end close is a procedure in accounting that makes sure all financial transactions carried out by the company throughout the month have been appropriately documented. Accountants carry out a number of responsibilities, including recording, reviewing, and reconciling, to make sure the financial transactions that are recorded are accurate.

However, each business has its own predetermined set of tasks and books-closing procedures. Here are a few standard tasks to complete during the month-end close.

  • Recording un-entered invoices
  • Insurance and mortgage entries
  • Reconciling the bank accounts & credit cards
  • Reconciling the discrepancy in the inventory
  • Comparing the budget and the actual expenditure
  • Closing the accounting period in the accounting software
  • Data analysis
  • Preparing the reports for the management team and investors

Information needed for the month-end close

The complete list of data that you require to close month end operation is provided below.

✅Bank account information

✅Credit card information

✅Accounts payable

✅Account receivable

✅Inventory data

✅Total revenue

✅Payroll data

✅Accrual & deferrals data

✅Balance sheets

✅Fixed assets data

✅General ledger data

✅Petty cash information

✅Sum of income & expense

✅Data from the supporting documents

The month-end close process

The accountants must compile, analyze, reconcile, and modify the financial data as part of the complicated and demanding month-end close process. It becomes more complex when you need to collaborate with the different functioning teams in order to get the correct financial information.

This procedure entails a number of actions that must be finished in a precise order and within a constrained amount of time. A summary of what usually occurs during the month-end close procedure is given below:

  1. Preparing for the close: The accounting team must ensure that all financial transactions for the period have been accurately and completely recorded before the month-end close process can start. Checking and reconciling bank statements, making sure all journal entries have been posted, and going over any outstanding things are all part of this process.
  2. Reviewing & analyzing financial data: The accounting team must check and analyze the financial data to make sure that everything is accurate and complete after confirming that all transactions have been recorded. This entails verifying that all accounts are balanced and reconciled, examining the general ledger for any mistakes or discrepancies, and contrasting the outcomes with projected or budgeted figures.
  3. Adjusting entries: The accounting team may need to make adjusting entries after evaluating the financial data in order to fix mistakes or properly allocate expenses to different time periods. This can entail changing depreciation, amortization, or accruals, among other things.
  4. Closing the books: The accounting team can move forward with closing the books once every adjustment has been made, and every aspect of the financial data has been carefully examined. This includes completing the trial balances, financial reports, and financial statements.
  5. Reporting & Analysis: The accounting department normally creates a series of financial reports, including an income statement, balance sheet, and cash flow statement, once the books have been closed. Management and other stakeholders will utilize these reports to comprehend the company's financial performance during the time period.
  6. Auditing: An audit might be necessary as part of the month-end close procedure, depending on the size and complexity of the business. In order to verify that the financial data and reports are accurate and comprehensive, an independent auditor must review them.

In general, the month-end close procedure is a crucial aspect of accounting that demands meticulous attention to detail, powerful analytical abilities, and a firm grasp of financial principles.

Businesses can ensure that their financial reports are trustworthy and give a true picture of their financial performance by completing this process precisely and quickly.

Best practices for the month-end close

Working during the month-end close makes it difficult to maintain accuracy since you have to consider so much financial information. However, by utilizing these practices, you can enhance the outcome of the month-end close procedure.

  • Accuracy:
    Accuracy is more important than closing fast. Before the month-end close process starts, make sure all financial information gathered is correct and current. This includes checking transactions, confirming transactions, and going over financial information. Producing accurate financial reports is essential in order to prevent mistakes that could cost you money.
  • Time management:
    It is essential to work with a plan to meet your deadlines. Establish a schedule for the month-end close procedure and plan ahead. Set deadlines, assign specific responsibilities to team members, and routinely check on progress. As a result, everyone involved will experience less tension and worry, and the process will be completed on time.
  • Knowing people:
    A good month-end close depends on developing strong connections with key people in the business, like department heads, accountants, auditors, and management. In this regard, communication is essential, so make sure you keep all interested parties up to date on developments and any problems that may occur.
  • Relationship building:
    The month-end close can be a frenzied time for you as an accountant, and so can it be for other team members. Be careful to treat everyone with professionalism and respect during the month-end close procedure. Encourage good attitudes, collaboration, and teamwork, and refrain from berating or criticizing teammates when errors are made.
  • Stress-free work approach:
    Stress and worry during the month-end close can be decreased by fostering a peaceful and encouraging work environment. Encourage team members who may be suffering to take breaks, offer resources like snacks and beverages, and show support. Keep in mind that a relaxed workplace environment can increase productivity and produce better outcomes.

Month-end close checklist:

Cash:

  • Verify that the balance in the accounting software corresponds with the bank statements by reconciling the accounts.
  • Examine all the pending checks and deposits for any that may need adjusting.
  • Reconcile the trial balance with the bank account.

Undeposited fund:

  • Verify whether the outstanding deposits from prior months have been paid in the current month.
  • Reconcile the account's balance to the specific cheque deposit that is expected to clear in the following month.

Account receivable:

  • Check the accounts receivable to see whether any credits have not been applied.
  • Verify whether the trial balance and the sum of the accounts receivable aging report are in accordance.
  • Check any past-due balances to see whether you need to write them off.

Accounts payable:

  • Check the accounts payable to see if there are any unapplied credits.
  • Verify that the trial balance matches the sum of the accounts payable.

Notes receivable:

  • Verify that the closing account balance and the associated loan amortization match up.

Reconcile all accounts:

  • Prepaid expenses
  • Verify that the balance matches the supporting schedule and can be linked to transactions that were paid in advance.
  • Check to see if the monthly cost is within the justification.

Fixed assets:

  • Verify the documentation of depreciation costs.
  • Create a list of all purchases and sales of fixed assets.
  • Reconcile the balance sheet accounts to the depreciation cost and accumulated depreciation totals.

Inventory:

  • Check to see whether you have any obsolete inventory that has to be written off.
  • Compare the trial balance to the overall inventory. 

Accrued payroll:

  • Track account balance to relevant payroll information

Accrued property tax:

  • The liability account balance agrees with the sales tax returns for the upcoming month.

Equity:

  • Verify that the owner's personal expenses are accurately recorded in the receivable account.

Expenses:

  • Check the general ledger to ensure that the entry classification in other accounts is accurate.

How Xenet can help you?

You are now aware of how challenging and chaotic the month-end close can be. However, if you know how to use accounting tools for month-end close, you can make it simple.

The laborious and time-consuming steps in the month-end close process include error detection and reviewing the books. By helping you reduce review time by 70%, Xenett streamlines the review and closing process. With 50+ AI-based checks, Xenett autodetects errors in your accounting books and accelerates the closing procedure by 80%.

Don't allow difficult accounting procedures to continue to hinder you! Book a demo call with Xenett and discover how it can simplify your month-end close.

FAQs(Frequently asked questions)

What is the month-end close checklist?

In order to ensure accurate financial reporting, accounting and finance professionals needs a checklist known as the month-end close checklist. It often involves preparing journal entries, examining financial statements, and reconciling accounts.

How do you prepare for month-end closing?

Make sure that all transactions are accurately documented and categorized in order to get ready for month-end close. Accounts should be reconciled, financial statements reviewed, and any required journal entries made. Communicate with relevant team members and follow established closing procedures.

What should your month-end reports contain?

Financial statements, such as the balance sheet, income statement, and cash flow statement, should be included in month-end reports. The outcomes of the comparison between the budget and actual spending, the key performance indicators, and any noteworthy transactions or occurrences for the month should also be included.‍

What is the benefit of month-end closing?

Monthly closing has the advantage of ensuring accurate and timely financial reporting. It enables companies to monitor performance, spot possible problems, and come to wise judgments. Additionally, it aids in meeting legal and regulatory requirements and offers stakeholders transparency.

What are month-end reconciliations?

The balances of financial accounts are compared and adjusted during month-end reconciliations to guarantee correctness and consistency with external records. Credit card statements, bank statements, and other financial documents fall under this category. Finding and fixing any flaws or discrepancies is the aim.

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