Taming Your Year-End Close

Five Tips for Taming Your Year-End Close

Whether you’re a large or a small district, closing out the year’s books and getting ready for the auditors can seem daunting. But year-end close procedures don’t have to be overwhelming.

Here are five tips for making the year-end close process more manageable:

Tip #1: Perform monthly reconciliations year-round

Reconciling significant accounts throughout the year will make the year-end close process easier, because it enables you to catch and correct errors timely.

• Complete a checklist of monthly processes, recurring journal entries, and the support needed to complete the reconciliation process
• Cash should be reconciled monthly. Other items to consider doing monthly are:
  • Ensuring clearing accounts are cleared
  • Reviewing fund balance to make sure it agrees to your prior-year audit report
  • Monitoring campus activity funds
  • Agreeing property tax revenue to tax collector reports

Tip #2: Create and follow a detailed year-end checklist

Start from the TEA deadline and work backwards to ensure everything is completed on time. Don’t be afraid of over-documenting your process — having lots of detail will help you in future years.

Your checklist can include:

• When to send out the end-of-year procedures that campus and departmental staff must follow, particularly cut-off dates for expenditures
• A list of year-end journal entries — Track and reference the support you use for any non-recurring entries such as accrued interest on investments, TRS on-behalf payments, property tax receivables and the state revenue adjustment
• A detailed list of the schedules you provide the auditor

Each checklist entry should include a deadline and a sign off with the date completed. Adding comments to the entry to assist in the future, such as a website link for reference, a list of requirements, and the source of the data are very helpful.

Tip #3: Train non-accounting staff to meet cut-off dates

In order for the finance department to close the year efficiently, campus and departmental staff have to do their part — which means you have to make sure they understand the requirements and the deadlines.

Tip #4: Keep track of your progress to avoid delays

Establish a way to track the completion and review of monthly, quarterly and annual items, including external audit requests. There are many ways to manage these documents, from manual binders to a shared drive to a secure cloud-based site like Dropbox.

Avoid common pitfalls and delays

Even the best-run business offices get tripped up occasionally, but you can save yourself time and frustration by taking these steps to prevent some of the most common complications:

• Each quarter, track capital asset additions, disposals and the status of construction in progress
• Maintain the schedule of expenditures of federal awards (K-1)
• Prepare year-end detail when you know that detail will be needed for the audit (such as accounts payable)
• Revisit the prior-year audit adjusting journal entries — can the District make the journal entries before auditors arrive?
• Perform a variance analysis between current year and prior year balances, documenting caused any significant changes

Tip #5: Keep up with changes

Take advantage of resources like TASBO to help you stay informed of changing financial reporting standards. TEA communications and the FAR guide aren’t the only changes to keep an eye on. There are also GASB pronouncements, changes to Uniform Guidance, and an annual OMB compliance supplement. If you issue a comprehensive annual financial report, be sure to review the latest GFOA checklist.

Year-end close can be much easier once you have processes and tools in place. To help get you started, Weaver has provided a sample checklist to download and modify to fit your own district’s needs.