Calendar year 2022 is done, which also means the fiscal year-end for many governmental and nonprofit entities is here. Without a proper plan, the year-end close process can be complex, time-consuming, and stressful, but it doesn’t have to be. Here are some tips to help make the year-end close a smooth and painless process for you and your team:
- Procedures Checklist & Timeline – Develop a year-end close checklist with clear, specific procedures and tasks that must be completed. In addition, include key milestone dates for each individual item, who is responsible for completing the task, and the individual responsible for reviewing and approving. Developing the checklist and timeline will allow you and your team to determine the work that must be completed along with key milestone dates to achieve, which can help everyone to manage their time and schedules accordingly. Finally, your team should meet frequently to review the checklist to provide updates and check that the team is on track to meet the key milestone dates as necessary.
- Communication – Early & Often – Regular internal and external communication is key to helping you stay on top of the year-end close process. Communication early on between your organization and all parties involved, including third parties such as actuaries, helps establish expectations of when the information is needed so your organization has the information in a timely manner.
- Reconciliations – Reconciliations are a significant part of the financial statement year-end close process, and many organizations spend numerous hours resolving issues and variances by waiting until year-end to complete these reconciliations. We recommend performing monthly or quarterly reconciliations throughout the year, which will help you and your team resolve errors prior to year-end.
- Preparation of the Annual Comprehensive Financial Report (ACFR) – During the year-end close process, consider taking the time to begin working on your ACFR or Annual Financial Report (AFR). Thinking ahead and gathering the underlying information to prepare key components of the report such as the management’s discussion and analysis, notes to the financial statements, updates to the statistical tables, etc., will ultimately help streamline your financial statement preparation process.
- Closing Meeting – Once you have successfully completed your year-end close, schedule a closing meeting between you and your team. It’s important to understand what current practices worked well and areas that could be re-evaluated and improved upon in the subsequent year. Evaluations and feedback from all individuals involved in the year-end close process gives your organization the opportunity to implement new and innovative ideas.
The year-end close process doesn’t have to be a long list of daunting tasks. The key to a successful year-end close is proper planning and having a system in place to allow you and your team to succeed. Taking steps to improve your financial statement year-end close process now can help you to worry less about the debits and credits and focus on achieving a smooth and painless year-end close. And, of course, celebrate with your team once you hit your key milestone dates!
If you’re interested in learning more about our Public Sector Reporting Solutions tool that can help streamline the ACFR or AFR preparation process, please reach out to a professional at FORVIS or submit the Contact Us form.