Addressing SOX Compliance Challenges With Workiva
Month End Close Checklist and Best Practices for Accounting Teams
Take a stroll through your accounting department as the end of the month approaches and you'll sense a palpable tension in the air. Pulses quicken, patience shortens, and pupils dilate as your highly qualified accounting team dives into yet another month-end close, fingers crossed that everything is smooth as silk and the data is accurate and timely.
Embark, of course, understands the month-end plight of the accountant and is here to help. In fact, we're giving you a two-for-one special – some critical month-end close best practices as well as our Accounting Month-End Close Checklist Template to integrate into your own procedures. With so much riding on your month-end process and reports, we figured it's the least we could do.
The Importance of Your Month-End Close
Your month-end close procedures are more than just a matter of dotting your I's and crossing your T's. They're about transparency and streamlined efficiency that's equal parts internal control and octane boost to your financial reporting. When firing on all cylinders, your month-end close process is insightful and thorough, leaving no accounting stone unturned, and integrates redundancies to ensure accuracy and reliability within your accounting data.
Likewise, your month-end closing doesn't exist in a vacuum. Instead, it reverberates throughout your entire organization. Business owners, management, finance, and virtually all decision-makers within your enterprise rely on month-end data to craft strategy and steer the whole company's direction, not to mention its importance to your financial statements and statement users. So on that note, we have a few critical best practices that can help ensure your monthly close process is streamlined, quick, and endlessly reliable.
Month-End Close Checklist Best Practices
First and foremost, our goal is for you to integrate our Accounting Month-End Close Checklist into your own processes. To tweak it and make it your own. After all, an in-depth, far-reaching checklist is, in fact, the most critical best practice you can have for developing effective month-end close procedures.
Further, a customizable checklist creates essential redundancies and safeguards to protect your financial data and processes from discrepancies, miscues, and miscommunication that can harm your organization. Therefore, to make it as personalized and potent as possible, we recommend keeping a few things in mind as you tailor our checklist to your company's specific bookkeeping and accounting needs.
- Organization is key. Whether you categorize your checklist by balance sheet account, entity, groups, or whatever else, make sure it's meaningful to you, your team, and management. That said, as you'll see from Embark’s checklist, we've started with the usual suspects:
- Incorporate consistently important data points and tasks, identifying who performs each function, when they should perform it, and which area of the financials it impacts. For example, for the cash category, designate particular people to gather bank statements, double-check pertinent bank account information, and perform bank reconciliations.
- Review individual and team responsibilities frequently across your accounting and finance team. Roles change over time, particularly when a significant transaction or transformational project is underway. An ongoing review of responsibilities prevents the panicked and rushed reassessment of roles as deadlines near and tensions rise.
- Find a midpoint between excessive and insufficient information. Your checklist should be thorough enough to provide adequate guidance, but not so much that it becomes a tedious and laborious block wall at the end of every month. For instance, exclude details that change every month or are extremely time-consuming.
Other Month-End Close Factors to Consider
As vital as a checklist is to your month-end procedures, there are several other best practices to keep in mind as well:
- Use your month-end and year-end close as educational tools. Young CPAs or those new to the organization can use the processes involved to better understand your company's financial information, operations, and accounting software.
- Speed is important but not nearly as essential as accuracy. Management, stakeholders, and your accounting department should all be on the same page, recognizing that reliable financial reporting and information trumps all other considerations. That obviously doesn't mean, however, that the process should stretch into the next lunar cycle.
- Excel will only get you so far. Wherever it makes sense, implement and leverage technology and capable, value-adding accounting systems into workflows. This notion applies to the checklist itself as well as the many processes involved in gathering, sorting, and analyzing data. RPA, for instance, can streamline and automate several processes that feed into your month-end procedures.
- Use month-end reporting to build relationships and improve communication outside of accounting and finance. With so many different aspects of operations converging into your month-end procedures, they provide a unique opportunity to positively impact both communication and culture within your workplace. In other words, your accounting – including your close – isn't just about credit card and savings account statements, depreciation, amortization, or a laundry list of expense accounts, invoice payments, and cash balances. Just as importantly, it's also about building essential relationships across the enterprise.
- Lastly, given how interconnected your accounting procedures and tasks are, accurate journal entries, a reliable general ledger, and a streamlined account reconciliation process – amongst many others – are also critical to the bigger reporting picture.
So take these best practices, along with our Accounting Month-End Close Checklist, and create a set of procedures tailored to your specific needs, that streamline your financial close processes, and maximize their impact. With clear inputs, a familiar interface, and the flexibility to mold itself around your company's particular demands, Embark's handy and helpful tool can bend and pivot as your enterprise grows.