Breathe Easier with these Year End Close Tips

Whether you’re in a large or a small district, closing out the year’s books and getting ready for the auditors can seem daunting. Here are some tips that should be helpful to make these last few months a little easier:

Perform monthly reconciliations

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 or, in some cases, quarterly are:
  • Reconcile investment accounts and earnings
  • Ensure clearing accounts are cleared
  • Monitor campus activity funds
  • Track capital asset additions, disposals, and the status of construction in progress
  • Agree on property tax revenue to tax collector reports

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 an annual comprehensive financial report, be sure to review the latest GFOA checklist.

Create and follow a detailed year-end checklist

Start from the TEA deadline and work backward 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 for the auditor. If you don’t have the auditor’s “provided by the client” (PBC) List yet, you can always use the prior year’s list as a guide or request it.
• Think about extending the checklist beyond year-end to include financial report dates, the data collection form, and submission to TEA.

Each checklist entry should include a deadline and a sign-off with the date completed. It’s also helpful to add comments to the entry to assist in the future. These may be a website link for reference, a list of requirements, or the source of the data.

Train non-accounting staff to meet cut-off dates

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

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.

The final countdown

• 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 what caused any significant changes
• Make sure there haven’t been any entries to the fund balance and your beginning fund balance agrees to the prior year's audited report
• Check inter-fund receivables and payables- confirm these net to zero
• Begin preparation of year-end details needed for the audit (such as accounts payable, accounts receivables, etc.)
• Create the schedule of expenditures of federal awards (K-1). It will need to be updated for final numbers but this will assist the auditors in determining their major programs for the Single Audit.

Year-end close procedures don’t have to be overwhelming. As we approach your District’s year-end, taking these steps will make the process more manageable!

Partner Sara Dempsey, CPA, leads Weaver’s practice serving governmental and nonprofit entities. She is a member of the GFOA Special Review Committee that evaluates annual financial reports for compliance with the GFOA Certificate of Achievement standards.

See weaver.com for more information.