×

Loading...

As “discussion is highly expected”, I add some points to the closing process and share my personal experience with XDJM who are in need. 请toysrus 等经验丰富的大虾们轻松一笑, 不要放过我的不足之处。:)

本文发表在 rolia.net 枫下论坛0. Facilitation of month end reporting

“Since the business runs in a dynamic environment”, particularly when the team faces situations like changing work force or increased business activities, I would treat monthly financial reporting process as a mini-project. It seems to be more efficient to send out the modified document with milestones to team members and other parties who provide you backup information several working days before the month-end. Using MS Project or other tool(s) could help teammates to report work progress and give feedback to each other. It helps if you have team member not based in head office.

1. Payroll

On monthly basis, payroll administrator may also administrate, reconcile, journal-enter other remittance items including WCB, employee RRSP, employee stock purchase plan, etc. If a company has manufacturing function, another pro-core closing activity is production bonus calculation (workers wouldn’t be energetic next month without bonus paid).

2. Invoicing

If you have consignment with the third parties, “comparing shipments to invoices” becomes a heavy role. Most likely you need to work with inventory personnel and corresponding sales representative on this task.

3. Payable

Some companies have corporate credit card payables, cash payables to directors and employees and other non-trade payables. Carefully schedule the timelines of closing off these accounts to eliminate the waiting period.

4. Inventory

Cost accountants may write a book for you on how to close off inventory. Which industry you work in and what systems you use determine the workload of inventory close. In manufacturing and other industries that could carry large amount of physical inventory, financial reporting facilitator usually plans an extra day or more on inventory close. Physical inventory count specialists might give you a hand to improve efficiency.

5. General Ledger
Addition: update/adjust accounts such as financial instruments and equity

Appreciate Toysrus and other Da Xia's effort!更多精彩文章及讨论,请光临枫下论坛 rolia.net
Sign in and Reply Report

Replies, comments and Discussions:

  • 希望对正在找相关工作的XDJM有所帮助:Month End Closing Process 希望对正在找相关工作的XDJM有所帮助:Month End Closing Process
    本文发表在 rolia.net 枫下论坛After posting The Functions of Corporate Accountants, I got a lot of feedbacks from XDJM. Some ask me to elaborate the functions I mentioned. Here I would like to share with you my understanding and experience on the process of month end closing and hope it would be of major interests.

    To facilitate an accurate and efficient closing, you need to do a number of items before the core closing period. First step in achieving a fast close is the complete documentation of every step in the closing process. This documentation should address all functional areas of the close, including payroll, invoicing, payables, inventory, cash and the general ledger. The primary focus of this documentation should be a complete itemization of the nature of each task, who completes it and the time required to complete it. I believe most of you in a medium to large corporation would have such document handy before you start. But since the business runs in a dynamic environment, you always need to modify and enhance the process based on your findings and improvement.

    Once the documentation or guide is ready, you can easily identify the most closing activities that need to be fulfilled within one week of month-end. However, some activities cannot be started until other closing tasks are finished, which greatly increases the duration of the close. The easiest and least costly way to enhance the speed of the close is to shift work outside of the period traditionally reserved for closing activities.

    Here is the list of general month end closing activities. I break it down into some major categories and further indicate their optimized processing period.

    1. Payroll
    Nowadays, most of the entities outsource their payroll responsibility to some specialized company, such as ADP, Ceridian. Even with the outsourcing, accountants still retain a lot of work in that area, especially for manufacturing companies which are not using calendar month end as their closing period end. The pre-core closing activities of payroll include: review billable hours; accrue wages, vacation time, calculate sales commissions and complete payroll journal entry. In the core closing of payroll, you need to verify month end time records, reconcile salaries & wages expenses along with payroll register, source deduction remittance and HR’s vacation records.

    2. Invoicing
    Revenue is the most sensitive number on a financial statement. It usually draws the first attention of the auditors and creditors. The creation of period-end invoices can occupy the largest part of the closing process in many companies. With the help of EDI billings, accountants are greatly released of their month end billing duty. But you will find more reconciliation required for this part as well as you are not involved in the billing activity. The pre-core closing requires compare shipments to invoices, accrue bad debts, bill recurring invoices, calculate deductions and accrue returns. The core closing is to complete all billings and accrue revenue according to GAAP.

    3. Payable
    Many accountants get into the habit of waiting up to a week after the period-end for supplier billings to arrive in the mail before they will even consider closing the books. If this is acceptable by the senior management, you probably can keep the way. But a lot of public companies have a tight closing and reporting schedule that does not generously grant you such privilege, then you need to find some up-front effort to eliminate the extensive waiting period. With the help of pre-authorized purchase orders or manually tracking supplier invoices, you can reduce your closing time window and improve accrual accuracy. The pre-core closing activities here are: send email to all supplier related personnel asking for estimate of the expenditure that are not billed yet, calculate overhead bases, review re-billable expenses, accrue unbilled supplier invoices and complete A/P journal entries. Core closing will then be to allocate overhead costs, briefly compare current period expenditure to those of prior comparable periods, update incoming supplier invoices (amounts are material).

    4. Inventory
    Without a doubt, the finest closing-related inventory best practice is to create an extremely accurate inventory tracking system, like proper labelling, rack locating, database updating, etc. The pre-core closing jobs are to determine LCM of each category and to determine obsolete reserve. The core closing, of course, is to count and value inventory using proper management policy and reconcile with shipments.

    5. Cash
    Many banks now offer online access to transaction information that is accurate through the preceding business day. If so, get into the habit of updating the bank reconciliation every day. Some might find this task is done within the daily corporate cash management. There is minimum to be left into the core closing period. Besides the daily bank reconciliation, the pre-core closing also includes reviewing uncashed cheques.

    6. Fixed Assets
    For those with big portion of fixed assets in terms of total assets, you might find its efficient to keep a fixed asset sub-ledger or a tracking spreadsheet continuity. Similar as the payables, prior to core closing, all you have to do is to accrue unbilled purchases, update the fixed assets register and calculate depreciation. Core closing will contain maintaining continuity schedule and reverse any major disposed assets.

    7. Final Closing – General Ledger
    Unfortunately, there is nothing can be done in this step prior to core closing. After finish all activities above and close all sub-ledgers, you will be required to do manual adjustments to the general ledger through journal entries. These adjustments include, but not limit to:
    Amortize prepaid expenses
    Amortize deferred expense (revenue)
    Adjust goodwill as per impairment testing
    Accrue interest expenses
    Reclassify loans according to their terms
    Accrue annual expenses and fees
    Revalue foreign currency assets/liabilities
    Tax provision

    After the first tier adjustments are done, you then produce a draft financial statement and review for any errors, correct the errors and missed adjustments for the second tier adjustments. Your last step of the month end closing is to produce a set of clean and well formatted internal financial statements that can be presented to your supervisor.

    I’m sure there are a lot of Rolians in this forum that are in charge of month end closing and can contribute more detailed and up-to-date knowledge to the topic. Above is just my knowledge and experience from a couple of years ago. Its not complete and accurate. Any comments are welcome and discussion is highly expected.更多精彩文章及讨论,请光临枫下论坛 rolia.net
    • Nice!
      • Could 几位老大 kindly talk Quater End Closing and Year End Closing? Especially the difference. You are greatly appreciated.
    • 辛苦了。非常详细全面;谢谢总结分享。
    • As “discussion is highly expected”, I add some points to the closing process and share my personal experience with XDJM who are in need. 请toysrus 等经验丰富的大虾们轻松一笑, 不要放过我的不足之处。:) As “discussion is highly expected”, I add some points to the closing process and share my personal experience with XDJM who are in need. 请toysrus 等经验丰富的大虾们轻松一笑, 不要放过我的不足之处。:)
      本文发表在 rolia.net 枫下论坛0. Facilitation of month end reporting

      “Since the business runs in a dynamic environment”, particularly when the team faces situations like changing work force or increased business activities, I would treat monthly financial reporting process as a mini-project. It seems to be more efficient to send out the modified document with milestones to team members and other parties who provide you backup information several working days before the month-end. Using MS Project or other tool(s) could help teammates to report work progress and give feedback to each other. It helps if you have team member not based in head office.

      1. Payroll

      On monthly basis, payroll administrator may also administrate, reconcile, journal-enter other remittance items including WCB, employee RRSP, employee stock purchase plan, etc. If a company has manufacturing function, another pro-core closing activity is production bonus calculation (workers wouldn’t be energetic next month without bonus paid).

      2. Invoicing

      If you have consignment with the third parties, “comparing shipments to invoices” becomes a heavy role. Most likely you need to work with inventory personnel and corresponding sales representative on this task.

      3. Payable

      Some companies have corporate credit card payables, cash payables to directors and employees and other non-trade payables. Carefully schedule the timelines of closing off these accounts to eliminate the waiting period.

      4. Inventory

      Cost accountants may write a book for you on how to close off inventory. Which industry you work in and what systems you use determine the workload of inventory close. In manufacturing and other industries that could carry large amount of physical inventory, financial reporting facilitator usually plans an extra day or more on inventory close. Physical inventory count specialists might give you a hand to improve efficiency.

      5. General Ledger
      Addition: update/adjust accounts such as financial instruments and equity

      Appreciate Toysrus and other Da Xia's effort!更多精彩文章及讨论,请光临枫下论坛 rolia.net
      • cool!
    • 谢谢数独精同学! 回头在来仔细看。
    • Good job! 补充几点: 我的month end closing tasks 是在以上7点之后才开始的, 算是故事的下集. Good job! 补充几点: 我的month end closing tasks 是在以上7点之后才开始的, 算是故事的下集.
      本文发表在 rolia.net 枫下论坛我的职责本是Decision support, 基本不参与月底结算. However, corporate requested additional information since mergers & acquisitions. I'm familiar with ERP data flow and report writing since I have been heavily involved in the implementations. So, I ended up with designing and maintaining some temporary to long term solutions during month end reporting. (很抱歉, 本来习惯尽量在中文论坛用中文, 但是谈到工作很多词不知怎么翻译才好, 只能夹花着胡说了)

      背景: 国际企业, Canadian Corporate finance, 基本就是个夹心饼干, 一边close local book, 一边prepare month end reporting package to corporate. 前辈把close local book部分说的很清楚了, 我就写一点后半部工作.

      - 因为公司行业特征和总部在欧洲, 我们出好几套报表: 1- local legal book, 2- local managerial reports, 3- IFRS reporting (corporate legal book), 4- Business warehouse (corporate managerial reports).

      -- 1- local legal book基本上就是G/L, 数据多而结构简单, 是一切报表的出发点. 基本是accounting group负责.

      -- 2- local managerial reports根据加拿大内部管理部门随时调整, 尤其是Sales几乎一年一个重组, 搞得我们在后面狂奔改ERP structure / reports不说, 还要保证调整后的数据和G/L reconcile, 这是我月底工作的第一步.

      -- 3- IFRS reporting, 公司总部对各部门, 各种费用的定义另有一套规定, 还涉及一些internal allocation, inter-company adjustment, 这部分在SAP的另一个COPA module里做, 数据来源最复杂, 出了问题如大海捞针, 这是我月底工作的另一个重要内容. 我很幸运, 从头到底参与了SAP implementation, 对数据结构比较了解且有充分access调数据, 每月基本能把数据对齐(IFRS也是legal reporting, 非对齐不可). 有朋友公司SAP技术支持外包, 内部super user 能用的功能很少, COPA没有一个月能reconcile的, 因为用做managerial reporting数字差一点高层并不太介意, 但对一个负责任的FA来说就很难受了, 真真是无语凝噎...

      这一部分报上去, 如果不被打回来修改, 加拿大的G/L才算真正close了.

      -- 4- Business warehouse, 是corporate的managerial reporting tool. 因为legal reporting 时间很紧, 不可能包括太多细节, 通常只汇报1 set of data. BW则是个大型数据库, multidimensional (货币, 产品, 市场, 大区, 各种费用, etc), 因为是供高层决策用, 各种费用的定义又和上面各不相同, 只关心和产品直接有关的费用. 要把这套报表跟前几者reconcile, 也是件人仰马翻的活.

      - 伺候完上面的头头, 接下来伺候本地头头: 出Executive reporting package给VP & CEO, managerial reporting package 给各中小头头. 很多时候把报表递到他们鼻子底下都懒得看, 有时(通常是年底)忽然发现有完不成预算危险, 一群人抓着财务要求最新报表. 这一块是我的正职, 帮助各部门经理理解财务数据, 也努力理解他们的business case, 理解数字后的故事乃至政治斗争, 是件很有趣的事情.

      今天本来准备响应号召写一篇关于工作习惯的文章, 有感兴趣的请催催我 :-)更多精彩文章及讨论,请光临枫下论坛 rolia.net
      • 十分有兴趣,快写吧:) 另外请问你月末对外报告和对内报告各需要多长天数?
        • Legal reporting: working day 3. Managerial reporting: target is day 10, or whenever I feel like unless it's year end :-)
      • 偶先来催催你!:) // 要不把你这篇另起一帖?
        • 不用了吧, 等各位都发言了, 再整理到顶上去不迟 :-)
      • 太棒了!几位老大就是牛, 总结出来的DD真是经典,埋头学习......
    • 这么好的总结,赞! 收藏!!
    • 很有帮助。谢谢!
    • Vote!
    • Some comments on Item 2,3 4 and 5. Some comments on Item 2,3 4 and 5.
      本文发表在 rolia.net 枫下论坛2. Invoice the outstanding shipments/packing slips only during month-end. Not necessary to review invoiced items again if the control on document/procedure flow exist: sales order->actual shipping->packing slip->invoicing. Special conditions: consignment sales, sales under bill-and-hold term etc.

      3. Accrue inventory based on receipt notes (matched to PO, not received invoice yet). In most cases, the system can do this step. Accrue expense based on expense form, credit card statement, time sheets etc. "Send email to all supplier related personnel asking for estimate of the expenditure that are not billed yet", I don't think this is a normal practice unless the company requires very tidy control and has very good cash flow position. Reconciling with some major vendors by month-end is good enough.

      4. "Determine LCM and obsolete reserve, count and value inventory", those are year-end procedures. Cycle count may be needed for month-end. In manufacturing industry, costing is the most time-consuming process: cost implosion, run costing utilities, allocate variances between FG and COGS, calculate material, labour, overhead absorptions etc.

      5. Reviewing uncased/outstanding cheques is part of bank reconciliation. Also need to book some scheduled payments (rent, lease etc.) and inter-accounts transfers.更多精彩文章及讨论,请光临枫下论坛 rolia.net
    • Some Suggestion Some Suggestion
      The month end procedure should also include financial statment analysis, for example, compare actual income statement results with budget, ratio calculation on balance sheet, etc. Therefore we could have a better feel on the operation, and truly understand where is the business direction and improvements required. To be a true professional accountant, you should be able to use your number to lead business strategy decision, not just the pure number on the books.