Year-end checklists and "to-dos" I should keep in mind

Hi Dan,
Keep tabs on closing inventories and A/R. Payables are usually OK.
You have not provided much details of your business so cant say more.
cheers
A

I guess more detail would be helpful. We are a ~300 person high-tech mfg company with operations in 6 countries and the usual (i suppose) assortment of global sales, mktg, product dev and manufacturing. Privately held and headquartered in Los Angeles. Hope that helps.

For a manufacturing company you should do a year-end complete physical audit (as opposed to a cycle count) to get a final accurate grip on your actual inventories. Then true up actuals to book and track down variances. Another inventory item for year-end is E&O (excess and obsolete) cleanup. Year-end is a great time to look for E&O inventories and write them off your books. You should have your CMs (contract manufacturers) do the same and remove any inventory from their systems that they may try to hang on you now or in the future. If it is contractually your inventory, you may as well get it off your books.

For receivables, I have found year-end "cleanup" to be a good excuse to try to wring payments from customers. It's a relatively slow time of year for a lot of companies so getting some attention from their accounts payable department can happen now. Get some reports out of your system for longest overdue and largest overdue receivables and hit the phones! If the receivables are unlikely to be collected, now is a good time to take a write off. If they come back to life, fine, but don't keep receivables on the books that you truly feel will not be paid.

For payables, time for you to clean up your own books. Take advantage of the relatively slow weeks leading up to year-end by cleaning out your overdue payables and running to ground any questionable invoices. Look to contractors, consultants and suppliers to get final invoices for the year. This will reduce accruals you would otherwise make and help nail down good year-end numbers without having to make a bunch of post year-end adjustments.

Accruals: now is the time to take stock. What accruals do you have out? Did you capture everything? I like to run a report of all of my year's accruals just to remind myself what we accrue. Then look through that list and ask whether you should have any of those same items accrued now. If so, nail them down. Find out who is responsible for the accrual or the vendor relationship and get good estimates for goods and services delivered but not paid. Get it all in writing as backup for your audit (if you will have one). All of this stuff is easier to do in the present tense, and tougher to do in the future when you have an audit b/c the info you need to back up your entries may be distant history by then. Worse yet, the person with the info may be fired or have quit by then! Get all documentation of all accounting items nailed down while it's fresh in everyone's mind.

Compensation: this is a great time to make sure all comp plans are current and agreed upon. This goes for sales and bonus plans. When will they pay out? What are the factors? Company vs. individual elements? Get it locked down before it becomes a contentious issue. Also a great time to work on commission splits (once again, while everything is fresh in everyone's mind). While you are at it, make sure bonus and commission accruals are in place and accurate and well documented (think "audit" at every step).

This is a very partial list. Hopefully others will chime in.

We also focus on the balance sheet side of things -- Cash, AR, inventory and AP. The most important timing item for me is making sure all reports that have data I might want to go back and use later get run before we process the first day of the new year -- these include detail sales data by customer and inventory class, AR detail trial balance, and the detail and summary inventory at year end. AP and GL details don't seem as time critical in my environment since we can make adjustments during January for December -- we can't do that as easily for the sales, AR and inventory sub-systems.

OK! Everyone has to start somewhere. I presume you came up through the ranks, drill back on your own prior experiences with the year end close,

OK! You didn't come up through the ranks, if you have a CPA, your local chapter of the Accountancy Board, should be able to help you. I hope you have some background, in the trenches, otherwise, this is going to be a bit draining on you, but you will get through it.

If you are real new and don't know the company books that well, this would be the time to be open with the Accounting Team to sit with them and get back to basics and see what they have been doing. In other words: Role up your sleeves and get in the trenches with them, before you set the guidelines. This will prove to be your best first approach. You cannot close what you don’t know what work you have to do, to actually do the close.

If the company you are with has, had previous year end closes. If not and this is the first time and you are new on the job and your company is a start up well, you will experience firsthand the joy of finding out how badly the Accounting was maintained, in many start-ups. If this is the first year end, you may end up going back several years, to clean up the accruals etc. You will need a lot of help from your Accounting Team to get the books cleaned up.
There is just too much to put down here.

Also, your question is extremely broad. As a Contract Controller, I have walked into several situations where the Books Have Never Been Closed Nightmares; hope this is not the case for you, especially if this is your first. Now that’s when it really becomes challenging.

Good luck and remember the old adage: How do you eat an elephant? Ans: One bite at a time. Same holds true here. Don't try to take on the broad scope of the Year End Close. Break it down into manageable pieces. Every company and industry is different but the basics apply across the board.

We are a manufacturing company with distributor subsidiaries in Germany and Switzerland. I'm fortunate to have a Controller and a Bookkeeper to get all the Balance Sheet lines reconciled to journals. Their work is very much like a monthly close except they clean up vendor claims and past due receivables which isn't a normal monthly task. I focus on updating the rent schedule (which allocates costs to departments) burden rates for bills of material and all the automatic entries for cost accounting. I also work up the eliminating entries for the consolidated statement. By the time we present the work to accountants, their job is pretty simple.