Preparing annual financial statements and preparing for auditors can be a stressful time for companies and it’s account staff. But it doesn’t have to be stressful There are some preparatory steps most companies can to make the process easier , quicker and more efficient. The important thing is to prepare before year end. For folks with a December year end, now’s the time to start.

It’s useful to do a kind of triage on previous year ends. What are the pain points? Work on those first. Here’s some ways to identify those:

  • Your staff can probably identify the things you spend the most time on
  • Go through prior year’s audit adjustments and comment letters.
  • Has the company started a new business line?
  • Has the company started new or different kinds of transactions
  • Review new accounting rules. Do you have to account for things differently?

Once you’ve identified the important and time consuming areas, make a plan to address them. Here’s some good practices.

  • Assess staffing levels. If you need help, don’t wait until the auditors show up.
  • Reconcile all the balance sheet accounts before year end – November period end). Work on the important ones first, but don’t forget the smaller ones. Often problems are hiding in accounts that aren’t regularly reconciled.
  • Make sure your reconciliations explain what’s in the accounts. It should not be just a roll-forward of the general ledger.
  • Make sure you can do a good variance analysis on income statement accounts. This often includes a comparison of the current year results to the prior years’ results and a budget.
  • Clean up AR Aging – make sure problem accounts are identified and included a reserve or written off. Make sure cash and credit memos are applied.
  • Make sure all liabilities are recorded. This could include an email (or other communication) to non-accounting folks to remind them to forward vendor invoices to accounting.
  • Schedule the audit so you have enough time to complete.

    These are just a few of the ideas to make sure your year-end financial statement preparation and audit goes smoothly.

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