One of the most important things we do for clients is to arrange an efficient, smooth process for the monthly close. Inherent in our process for a smooth close is to work with the existing staff to organize and direct the close procedures. The first thing that helps to clarify the tasks is to create a Monthly Close Checklist. The checklist should be very detailed and include all of the activities and journal entries that need to be made for the close to be complete.
The checklist includes the journal entry number (to be entered after journal entry is posted), description of the activity/journal entry, purpose and notes related to the entry, date to be posted, person responsible, a column to initial or mark when complete, the actual posting date and the amount of time needed to complete. I also include all the reversal journal entries. Typically I like to have both the onsite staff as well as the TGG staff on this list. At the bottom of the checklist I summarize the time by position (i.e. Staff Associate, Accounting Manager etc.).
This allows for the resource planning necessary to complete the month end close and segregate the responsibilities between inside staff and TGG staff. It also makes it very easy to have a conversation with management about the shared responsibilities and realistic goals for being able to accomplish all the tasks necessary to complete the close and meet all deadlines. It is not unusual for clients to underestimate the time involved in the close process. If you meet with them to discuss, armed with the detailed checklist, you will be prepared to show them the time that is truly involved. It also helps to educate the client and communicate where all those consulting hours are coming from.
To come up with the dates for each of the items on the checklist, start with the deadline, which is often the date that the financial package needs to be delivered. Work backwards to determine when each of the tasks needs to be completed including account reconciliations, in order for journal entries to be made. Allow time to run financials and review. Many times there will be coding errors and expenses out of the normal range that should be understood before the close is complete. It’s too late to correct them if you don’t discover them until you are analyzing the variances on the financials.
It is also important to keep up the checklist until all items are complete. After the checklist is complete you can begin preparing financials for review.Written by: Nancy Brzezniak TGG Accounting