Imran MI

Month End Closing

Written By
Muhammad Imran MI
https://www.linkedin.com/in/imran-mi-
997875320/
Month End Closing Checklist.
Let's delve into a more detailed version of
the month-end closing checklist, expanding
on each section and providing more
granular tasks. This should give you a robust
framework to customize for your specific
needs.
I. PRE-CLOSING TASKS (Before Month-End)
This section focuses on getting your data in
order before the official closing period. This
proactive approach minimizes stress and
potential delays.
• A. General Preparation:
o 1. Review the Closing
Calendar: (Detailed: Confirm all
internal and external
 deadlines. Include the day of the
month for close (e.g., close date +3
for reporting). Account for holidays,
weekends, and any known staffing
constraints.)
o 2. Communicate Deadlines and
Requirements: (Detailed: Send a
formal communication (email,
memo) to all relevant
departments. Specify what data is
needed, the format required, and
the due date. Outline any changes in
procedures or reporting
requirements. Identify points of
contact for questions.)
o 3. Review System
Backups: (Ensure that backups of
accounting software and all related
 files (e.g., spreadsheets, scanned
documents) are scheduled
regularly. Test a recent backup to
verify its integrity. Confirm backup
location (offsite, cloud) and recovery
procedures.)
o 4. Prepare Issue Log: (Establish a
centralized log (spreadsheet, shared
document) to track all open issues,
questions, and potential
discrepancies. Include a description
of the issue, who is responsible for
resolving it, the target resolution
date, and the current status.
Regularly review and update this
log.)
o 5. Accountant's Review: (Schedule a
preliminary review with your
 accountant or accounting team to
review the accounting activities.)
• B. Data Entry and Reconciliation
(Detailed):
o 1. Sales:
▪ a. Enter Sales Invoices and Credit
Memos: (Reconcile sales order
numbers to invoices, ensure
accurate customer information,
and correct pricing. Check for
missing invoices.)
▪ b. Review Unbilled Sales
Orders: (Identify all sales orders
that have shipped but haven't
been invoiced. Determine the
reason for the delay and address
it. Accurately estimate any
unbilled revenue based on the
 goods delivered or services
rendered. Review any advanced
billing requirements.)
▪ c. Sales Tax
Reconciliation: (Reconcile sales
tax collected to sales reports and
sales tax liability
accounts. Verify the accuracy of
sales tax rates
applied. Address any
discrepancies
promptly. Prepare for filing sales
taxes.)
▪ d. Sales
Returns/Allowances: (Enter any
returns or allowance during this
period.)
 ▪ e. Reconcile Gross Revenue vs.
Net Revenue: (Reconcile gross
revenue to any discounts given in
order to come to the net revenue
amount.
o 2. Purchases/Payables:
▪ a. Enter Vendor Invoices and
Credit Memos: (Verify that
invoices match purchase orders
and receiving reports (if
applicable). Review invoices for
accuracy (pricing, quantities, and
terms). Enter all invoices
promptly. Properly match
invoices with the PO and goods
received.)
▪ b. Review Outstanding Purchase
Orders: (Identify outstanding
 purchase orders that have not
been fully received. Follow
up with vendors on outstanding
orders. Ensure that all goods
received or services performed
are recorded in the
system. Consider accruing for
goods or services received but
not yet invoiced (GR/IR).)
▪ c. Vendor Statement
Reconciliation: (Reconcile vendor
statements to accounts payable
records. Investigate any
discrepancies, documenting the
resolution. Confirm correct
mailing addresses and terms.)
▪ d. Accounts Payable
Reconciliation: (Reconcile the
 payables aging report to the
general ledger balance. Make
sure all invoices and credit
memos are correctly
matched. Investigate any
unmatched items.
o 3. Cash Receipts:
▪ a. Record Cash and Check
Receipts: (Ensure all cash and
check receipts are recorded
promptly. Allocate receipts to the
correct customer
accounts. Document the source
of each payment and the date
received.)
▪ b. Reconcile Cash Receipts to
Bank
Deposits: (Compare recorded
 receipts to bank deposit
records. Investigate any
discrepancies. Address any
missing deposits or payments.)
▪ c. Investigate Unusual
Activity: (Review large or unusual
receipts. Understand the source
of each payment.)
o 4. Cash Disbursements:
▪ a. Record Cash and Check
Payments: (Enter all cash, check,
ACH, and credit card payments
into the system. Ensure that all
payment information (vendor,
amount, date) is
accurate. Confirm all payment
information is properly matched
to the vendor invoice.)
▪ b. Reconcile Disbursements to
Bank
Transactions: (Compare recorded
payments to bank
statements. Investigate any
discrepancies or unmatched
items. Address any issues
promptly.)
▪ c. Review Bank
Charges: (Review bank charges,
fees, and interest. Allocate them
to the correct expense
accounts. Make any corrections
as needed.)
▪ d. Investigate Unusual
Activity: (Review large or unusual
disbursements. Understand the
purpose of each payment.)
o 5. Payroll:
▪ a. Process Payroll: (Run the final
payroll for the month, including
salaries, wages, commissions, and
bonuses. Verify the accuracy of all
earnings and
deductions. Make any necessary
adjustments.)
▪ b. Payroll Register
Review: (Review the payroll
register for accuracy, including
earnings, deductions, and net
pay. Confirm accuracy of pay
rates and hours worked.)
▪ c. Reconcile Payroll
Liabilities: (Reconcile payroll
liability accounts (payroll taxes
payable, employee deductions
 payable) to payroll reports and
tax filings. Ensure that amounts
owed to tax authorities are
accurate and that payroll
payments have been made on a
timely basis. Confirm all amounts
are paid and up to date.)
▪ d. Review with
Accountants: (Review the payroll
register to make sure everything
is correct and accurate.)
o 6. Inventory (If Applicable):
▪ a. Update Inventory
Records: (Record all inventory
receipts, issues, and
adjustments. Verify inventory
levels and ensure that they are
up-to-date. Review all activity in
 order to make sure it matches
with the source documents.)
▪ b. Physical Inventory
Count/Cycle Counts: (*If
applicable, perform a physical
inventory count or cycle
counts. Reconcile the physical
count to your inventory
records. Investigate and adjust
for any discrepancies (shrinkage,
obsolescence). Record adjustmen
ts to the inventory.)
▪ c. Cost of Goods Sold
Calculation: (Calculate the cost of
goods sold (COGS) based on
inventory movements and the
chosen inventory costing method
(FIFO, LIFO, weighted
 average). Review the COGS
calculation to ensure it is correct
and reasonable.)
▪ d. Inventory
Valuation: (Review inventory
valuation to make sure it reflects
market value.)
▪ e. Obsolete
Inventory: (Review the inventory
and determine any obsolete or
slow-moving items. Write-
down the value of any obsolete
inventory.Review inventory
valuation to make sure it reflects
market value.)
o 7. Fixed Assets (If Applicable):
▪ a. Record Asset Purchases and
Disposals: (Record any new asset
 purchases, including the asset's
cost, useful life, and depreciation
method. Record any asset
disposals, including the date of
disposal, the sale price, and any
gain or loss on disposal.)
▪ b. Depreciation
Calculation: (Calculate and record
monthly depreciation for all fixed
assets, according to their useful
lives and depreciation
methods. Review the
depreciation calculation to
ensure accuracy.)
▪ c. Fixed Asset
Reconciliation: (Reconcile the
fixed asset register to the general
ledger. Ensure all fixed asset
 details are correctly entered in
the accounting
system.Review the fixed assets
listing.
o 8. Accruals and Deferrals:
▪ a. Accrued Revenue and
Expenses: (Review and adjust all
accrued revenue and expenses
(e.g., interest, utilities, rent,
salaries, bonuses). Ensure that all
accruals are properly recorded
and supported by
documentation. Ensure accruals
are within budget and prior
periods.*
▪ b. Deferred Revenue and
Expenses: (Review and adjust all
deferred revenue and expenses
 (e.g., prepaid insurance,
unearned revenue, prepaid
rent). Ensure that all deferrals are
properly recorded and supported
by
documentation. Ensure deferrals
are within budget and prior
periods.*
▪ c. Accrual
Schedules: (Prepare any
schedules that will make it easier
to do the adjustments.*
▪ d. Review Accruals and
Deferrals: (Review and ensure
the appropriate amounts are
being accrued or deferred.)
• C. System Checks:
 o 1. Perform Accountant's
Review: (Review the accounting
activities in order to search for any
errors that may have occurred in any
of the above tasks.*
o 2. Bank Reconciliation Review: (Look
over the bank reconciliation to make
sure it is complete and accurate and
that all missing information has been
located.
o 3. Open Issues: (Ensure all open
issues are resolved or have a plan for
resolution. Make sure the timeline is
met.)
o 4. Check Reports: (Look over the
financial reports for any unusual
activity that may have occurred.
II. CLOSING TASKS (During Month-End)
This section outlines the steps during the
official closing period, including reconciling
accounts and making necessary
adjustments.
• A. Reconciliation (More Detailed):
o 1. Bank Reconciliation: (Complete all
bank reconciliations for all bank
accounts. Compare the bank
statement to the company's cash
records. Identify and investigate any
outstanding items (outstanding
checks, deposits in
transit). Resolve any discrepancies
and ensure that the bank balances
reconcile to the general
ledger. Check the bank reconciliation
for accuracy.)
o 2. Accounts Receivable
Reconciliation: (Reconcile the
accounts receivable aging report to
the general ledger
balance. Compare the aging report to
the general ledger balance to ensure
all balances are
accurate. Investigate and resolve any
discrepancies. Review large balances
and determine collectability.)
o 3. Accounts Payable
Reconciliation: (Reconcile the
accounts payable aging report to the
general ledger balance. Review the
aging report and
balance. Investigate any
discrepancies. Verify that all liabilities
 are accurately recorded. Confirm the
vendor is paid and the terms.)
o 4. Inventory Reconciliation: (*If
applicable, reconcile inventory
records to the physical inventory
count, if applicable. Compare the
physical count or cycle count results
to your perpetual inventory
records. Identify any discrepancies
(shrinkage, overage) and make
necessary adjustments. Ensure all
inventory adjustments are properly
recorded in the general
ledger. Review the inventory
valuation report to make sure it's
correct.)
o 5. Payroll Liabilities
Reconciliation: (Reconcile payroll
 liabilities accounts (e.g., payroll taxes
payable, employee deductions
payable) to payroll reports and tax
filings. Verify that the balances in the
general ledger agree with the payroll
reports and tax filings. Ensure that all
liabilities are accurately accounted
for and that amounts owed to tax
authorities are up-to-
date. Compare the details between
the amounts and the liabilities
report.)
o 6. Intercompany Reconciliation: (*If
applicable, reconcile intercompany
transactions and
balances. Prepare intercompany
reconciliations, ensuring that all
intercompany transactions are
 properly eliminated. Resolve any
intercompany
discrepancies. Confirm the balances
agree.)
o 7. Other
Reconciliations: (Perform any other
necessary reconciliations, such as
those related to: loans payable,
prepaid expenses, etc.*
• B. Journal Entries (More Detailed):
o 1. Record Adjusting Entries: (Post all
necessary adjusting entries for
accruals, deferrals, depreciation,
inventory adjustments, and other
items identified during
reconciliations. Ensure that all
adjusting entries are properly
documented and supported by
 adequate evidence (e.g., invoices,
calculations). Adjust for any accruals
and deferrals.
o 2. Record Closing Entries: (Close out
temporary accounts (revenue,
expenses, and owner's draws) to
retained earnings. Verify that the
balance of all temporary accounts is
reduced to zero. Ensure that the
closing entries are properly
recorded.
o 3. Review all entries: (Review all the
entries.)
• C. System Closing:
o 1. Close System: (*Close the
accounting system. Verify all data
has been updated, and no other
entries can be entered.)
 o 2. Run Standard Reports: (Run all
standard financial reports.
*Reconcile and close your accounting
system. Save all financial reports.
III. POST-CLOSING TASKS (After Month-
End)
This section focuses on analysis, reporting,
and follow-up after the closing period.
• A. Review and Analysis (More
Detailed):
o 1. Review Financial
Statements: (Review the income
statement, balance sheet, and cash
flow statement for accuracy,
completeness, and
reasonableness. Compare current
period results to prior periods and
 budgets. Assess the financial
performance of the business.*
o 2. Variance
Analysis: (Compare actual results to
budget, prior periods, and industry
benchmarks. Identify and investigate
significant variances. Determine the
reasons for the variances and
document findings. Assess the
accuracy of the original budget.)
o 3. Key Performance Indicators
(KPIs): (Analyze relevant KPIs for
your business (e.g., sales growth,
gross margin, operating expenses,
customer acquisition
cost). Monitor key performance
indicators to track progress against
strategic goals. Identify areas for
 improvement. Identify and report on
any trends.)
o 4. Trend Analysis: (Identify any
trends in financial
data. Analyze financial results over
multiple periods to identify emerging
trends. Make adjustments to
operations, where
necessary. Identify areas for
improvements.*
o 5. Revenue and Expense
Analysis: (Assess the revenue
streams and
expenses. Determine the financial
effects of each.)
o 6. Write a brief report on the
financials.
• B. Reporting (More Detailed):
o 1. Prepare Reports for
Management: (Prepare financial
reports and analysis for
management, including the income
statement, balance sheet, cash flow
statement, variance analysis, and KPI
reports. Create management reports
and tailored for the specific
audience. Ensure that the reports are
clear, concise, and easy to
understand.
o 2. Report Presentation and
Review: (Present the financial results
and analysis to
management. Ensure that all
stakeholders understand the
information. Summarize the key
findings and
 recommendations. Receive manage
ment feedback.
o 3. Distribute
Reports: (Distribute reports to
appropriate stakeholders according
to company policies and
requirements (e.g., management,
investors, board of
directors). Deliver reports promptly
to the correct
audience. Maintain control of the
information.*
o 4. Secure the Report: (Make sure
that any financial reporting
information is secure.)
o 5. File for Taxes: (File all required
taxes, as needed.)
• C. Documentation and Filing (More
Detailed):
o 1. File Supporting
Documents: (Ensure that all
supporting documentation (invoices,
receipts, bank statements, contracts,
etc.) is properly filed and
organized. Maintain an organized
system for storing
documentation. Create an effective
file system.
o 2. Storage: (Make sure that there is
enough storage for documentation.)
o 3. Backup: (Verify that backups of
your accounting software and data
are performed and stored securely,
and that data can be
 restored. Review the process and
confirm that it's properly backed up.)
• D. Review and Improvement (More
Detailed):
o 1. Review the Closing
Process: (Review the month-end
closing process and checklist for
areas where improvements can be
made. Identify the steps in the
process that can be automated or
streamlined. Identify any bottlenecks
or inefficiencies.*
o 2. Update the Checklist: (Update this
checklist and any other relevant
documentation to reflect any
changes to the closing
process. Record all changes in the
 checklist. Ensure the checklist
reflects current procedures.
o 3. Training: (Train staff for new
procedures.
o 4. Review with
Accountants: (Review the accounting
activities with the accountant for
suggestions for
improvement. Make adjustments to
the accounting activities for
improvement.
IV. SPECIFIC CONSIDERATIONS (Customize
for Your Business)
This section is where you tailor the checklist
to your specific business needs.
• A. Software Specific
Procedures: (Detailed: List all actions
 specific to your accounting software
(e.g., QuickBooks, Xero, SAP, Oracle
NetSuite). Include screen shots,
procedures and where the procedures
can be found.)
• B. Industry-Specific
Tasks: (Detailed: Add industry-specific
tasks. For example:
o Manufacturing: Include tasks related
to work in progress (WIP), standard
costs, job costing, and bill of
materials (BOM).
o Retail: Include tasks related to point-
of-sale (POS) reconciliation,
inventory adjustments, and sales
analysis by product.
 o Construction: Include tasks related to
percentage of completion
accounting, job costing, and WIP.*
• C. Company Size and
Structure: (Detailed: Tailor the checklist
to the complexity of your business. A
small business may have fewer steps
than a large corporation. Assign tasks to
specific people and list who they are.)
• D. Task
Assignments: (Detailed: Assign all tasks
to specific individuals. Note their initials
on the checklist as tasks are
completed. Create a RACI matrix
(Responsible, Accountable, Consulted,
and Informed) for tasks.
• E. Frequency and
Timing: (Detailed: Determine how often
 each task needs to be performed
(monthly, quarterly, and
annually). Establish deadlines for each
task. Set an overall timeline for the
entire closing process.)
• F. System
Integration: (Detailed: Integrate account
ing systems with other business systems
(e.g., CRM, POS, and Inventory
Management). Review data flows and
interfaces for accuracy and
completeness. Ensure data integrity
across all systems.
• G. Automation
Opportunities: (Detailed: Explore possibi
lities to automate or streamline tasks
within your accounting software and
other systems. Identify areas where
 manual processes can be automated
(e.g., recurring journal entries, bank
reconciliation). Automate and simplify
processes.)
• H. Key Metrics and
Dashboards: (Detailed: Identify the key
metrics that are important to your
business and how to track and measure
them. Create dashboards to view and
share financial information. Make your
financial information easy to
understand.)
• I. Budgeting and
Forecasting: (Detailed: Look over your
budget and make sure it makes sense
and the financial activities make sense.*
V. TIPS FOR EFFICIENCY (Expanded)
• A. Standardize and Document:
 o 1. Create clear written procedures for
each task.
o 2. Use consistent formatting and
naming conventions for all
documents and files.
o 3. Maintain a detailed
documentation of all accounting
procedures.
o 4. Document and save all steps and
procedures.
• B. Automation and Technology:
o 1. Use your accounting software to
automate tasks (recurring journal
entries, bank reconciliations).
o 2. Explore other systems.
o 3. Integrate your accounting system
with other systems.
 o *4. Use spreadsheets to assist with
the closing process.
• C. Accurate Records:
o 1. Keep accurate records of all
transactions and adjustments.
o 2. Maintain a complete audit trail for
all financial data.
• D. Streamlined Communication:
o 1. Maintain open communication
with other departments and
stakeholders.
o 2. Provide feedback to others so it
can benefit the future.
o 3. Establish clear communication
protocols for resolving issues and
answering questions.
• E. Proper Training:
 o 1. Ensure that all staff members are
properly trained on their
responsibilities.
o 2. Stay current on accounting rules
and laws.
• F. Quick Reconciliation and Review:
o 1. Reconcile all accounts as quickly as
possible.
o 2. Review your work.
o 3. Review and correct mistakes
quickly.
• G. Audit Trail and Security:
o 1. Your accounting system should
provide an audit trail for every
journal entry.
o 2. Make sure that the data is safe
and secure.
 o 3. Secure your data.
By implementing this more detailed
checklist and focusing on efficiency, you can
significantly improve your month-end
closing process. Remember to regularly
review and refine the checklist to adapt to
your evolving business needs. Good luck!
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