Year End Accounting Process Checklist

The Accounting Adjustments process step involves reconciling financial statement accounts to ensure accurate reporting of an organization's performance. This process typically occurs during a specific period or at year-end and involves identifying any differences between the accounting records and external financial statements. Adjustments are made as necessary to correct errors, account for events that have occurred but have not been recorded, or to rectify discrepancies discovered during audit or review. The adjustments may include accruals, reversals of prior-year estimates, corrections of errors in revenue recognition, amortization, depreciation, and changes in accounting policies. After completing the Accounting Adjustments process, financial statement accounts are updated to reflect accurate and reliable information, ensuring compliance with regulatory requirements and standards.

The Trial Balance process step is a critical intermediate step in the accounting cycle that verifies the equality of debits and credits across all general ledger accounts. In this stage, all nominal and real accounts are extracted from the ledgers and summed up to produce two totals: one for total debit balances and another for total credit balances. The resulting Trial Balance report lists each account with its corresponding balance, allowing accountants to check for errors or discrepancies in the accounting records. This step is essential to ensure that the financial statements, including the Income Statement and Balance Sheet, are accurate and reliable.

The Financial Statements process step involves compiling and presenting detailed financial reports that provide stakeholders with an accurate representation of a company's financial performance. This includes generating balance sheets, income statements, and cash flow statements that demonstrate revenue, expenses, assets, liabilities, and equity over a specific period. The process typically begins with gathering relevant financial data from various sources, such as general ledger accounts, invoices, and bank statements. Next, the data is organized and summarized into the aforementioned financial reports using accounting software or manual calculations. Once complete, the financial statements are reviewed for accuracy and completeness before being finalized and presented to stakeholders, including investors, creditors, and regulatory bodies, in compliance with relevant laws and regulations.

The Auditor Review process step involves conducting an independent examination of the quality management system (QMS) to ensure it meets regulatory requirements. During this step, auditors assess the QMS's effectiveness in achieving its intended purposes and identify areas for improvement. They review documentation, conduct interviews with personnel, and observe processes in action to validate compliance. The auditor reviews the QMS's scope, policies, procedures, and records to ensure they are accurate, complete, and up-to-date. This step helps to prevent errors, reduce risk, and ensure the organization is operating in accordance with industry standards and regulatory requirements.

Closing Entries is a critical accounting process step that marks the completion of a fiscal period. It involves reconciling all account balances to ensure they accurately reflect the company's financial position. This step includes adjusting entries for accrued revenues and expenses, closing temporary accounts such as revenue and expense accounts, and transferring their balances to permanent equity or liability accounts. Additionally, it involves updating the balance sheet accounts to reflect any changes in assets, liabilities, or equity. The Closing Entries process ensures a clean start for the new fiscal period, helps identify errors or discrepancies, and maintains the integrity of the company's financial records.

The Accounting Records process step involves the collection, storage, and management of financial transactions and records. This includes receipts, payments, invoices, and bank statements. The objective is to ensure accuracy, completeness, and timeliness in recording all financial activities. In this process step, accounting personnel or automated systems update general ledger accounts, journal entries, and other financial databases. Supporting documents such as receipts, cancelled checks, and vendor invoices are also maintained. All transactions are verified for proper authorization, completeness, and mathematical accuracy before being recorded. This process ensures compliance with established accounting policies and procedures, and provides a reliable foundation for financial reporting and analysis.