december2021 - 9

FEATURE
ACCOUNTING:
CONFIRM AND RECORD
ADJUSTING JOURNAL ENTRIES
* Remind your clients to conduct a
year-end physical inventory count
to record necessary adjustments
based on variances.
* Review and confirm large purchases
for necessary capitalization. Remind
clients of fixed asset count, and
record necessary adjustments based
on variances.
* Review aged accounts receivable
balances for possible write-offs or
collection steps.
* Review aged accounts payable
balances for possible adjustments.
* Review other current liabilities,
including payroll and sales tax,
to reconcile and or make timely
adjustments.
* Confirm loan balances to record
the necessary split of principal and
interest.
* Review personal vs. business nature
of transactions to confirm proper
classification.
* Research and ensure proper
accounting treatment of funds
received under the Coronavirus
Aid, Relief, and Economic Security
(CARES) Act.
RECONCILE ACCOUNTS
* Reconciling all the balance sheet
accounts is at top of the year-end
closing checklist.
* Reconcile bank and credit cards
accounts to ensure that accounting
transactions match bank and credit
card statements.
* Reconcile prepaid insurance and
payroll accrual account balances to
achieve compliance with accounting
standards.
* Reconcile revenue account where
point of sale applications are used
to record revenue.
REVIEW FINANCIAL
STATEMENTS
* Prepare comparative balance sheet
statements to analyze variances.
This will help clients measure
growth.
* Prepare trending and comparative
income statements to review with
clients. This will not only ensure
proper classification of business
income and expenses, but also
confirm any gaps in recurring
transact ions or any abnormal
expenses.
ANALYZE CASH FLOW
STATEMENTS
* Prepare annual cash flow statements
to confirm net changes in cash. Current
changes in the economy driven
by COVID-19 enforce a need to put
close control over cash liquidity.
* Review cash outflows and inflows
with your clients to identify and
confirm the trends. This will help
identify outliers, if any.
COMPARE BUDGET
VS ACTUALS
* Prepare comparative reports to
review variances between actual
and budgeted numbers. This helps
business owners measure targets
and adjust the budget for next year.
* Comparing budget and actuals also
helps to analyze individual department
or cost center performance to
prepare proper allocations.
LOCK THE PERIOD
* Once all the accounting adjustments
are recorded based on the review
of the records with your client, it is
very important to lock the accounting
period to avoid any back-dated
changes to accounting records. The
financial statements will be used for
tax preparation.
HR AND BENEFITS:
REVIEW PTO POLICIES AND
ADJUST BALANCES
* If your client has employees who
are eligible for vacation and sick
time, it is important to remind
them to review personal time off
(PTO) policies closely. There may
be restrictions to carry forward
accumulated balances that may
require accounting adjustments.
* Review and reconcile any PTO balances
that may require any liability
adjustments.
CONFIRM BONUS,
INCENTIVES, OR COMMISSION
RELATED REQUIREMENTS
* If your client has employees who
are eligible for bonuses, incentives,
or commissions, it is important to
calculate year-end payouts based
on respective policies.
* Year end is also a good time to
review and make changes to policies
based on employee performance.
The compensation plan should
be reviewed and adjusted on an
annual basis.
EVALUATE EMPLOYEE
RECOGNITION AND
APPRECIATION PROGRAMS
* Employee recognition is an effective
way to communicate that efforts and
hard work contribute to the success
of the company. It helps your team
understand company values and
culture. Most companies arrange
annual meetings to give employee
awards.
* Several other ways to show
employee appreciation include
sending personalized holiday gifts,
sponsoring family dinners and
getaways, and offering extended
time off.
REVIEW RESOURCE
REQUIREMENTS
* The end of the year is the ideal time
to analyze employee turnovers and
resource requirements that need
to be adjusted based on the revised
budget and adjusted business plan.
INFORMATION
TECHNOLOGY:
GENERATE NECESSARY
BACKUP FILES
* It is essential to keep backups of all
DECEMBER 2021 ■ www.CPAPracticeAdvisor.com
9
important data. Download all the
important workpapers, contacts,
files, and reports to secure loss of
data in case of any disasters or data
breaches.
CLEAN UP AND ARCHIVE
REDUNDANT FILES
* When we are too focused on ensuring
accurate bookkeeping and data
maintenance, we can unknowingly
start hoarding data. It is essential
to schedule a time to clean up
unnecessary data and update your
data retention policies.
EVALUATE AND RECONSIDER
YOUR TECH STACK
* In an ever-evolving technologically
advanced age, it is hard to keep
up with every update. However, it
is important to create a year-end
checklist to confirm your server
requirements, review your security
policies, and reconsider your tech
stack. There is always a possibility
for a faster, better, and cheaper
application being available for your
businesses.
Closing a business year
can be a stressful period for us
and our clients. By creating a
customized workflow and following
a checklist, you can avoid
year-end burnout. Good luck! ■
Bhairavi Parikh, CPA, is a fractional CFO
and consulting controller for Analytix
Solutions. With more than 15 years of
experience in public and private accounting,
Parikh is well versed in managerial
accounting and CFO services for small- to
mid-size organizations. After earning her
CPA designation in 2004, she spent four
years leading a team that was responsible
for the internal audit, and internal
and external financial reporting for a
company with annual revenues in excess
of $3 billion. Find Parikh on Twitter @
Bhairavi_CPA.
http://www.CPAPracticeAdvisor.com
december2021

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