Month-end financial close
Month-end close is the clearest example of a process that lives entirely in one person's head and has a hard external deadline. It usually runs on a remembered sequence rather than a written one, which means it cannot be covered when that person is on leave, and an auditor asking who reviewed the reconciliation gets an uncomfortable answer.
- 1
Accounts Assistant confirms all sub-ledgers are closed to new postings for the period.
Accounts Assistant
Timing: Working day 1
Close the gate first. Postings arriving mid-close are the main cause of reconciliations that balanced yesterday and do not today.
- 2
Accounts Assistant posts all recurring journals: accruals, prepayments, depreciation, and payroll allocations.
Accounts Assistant
Timing: Working day 1 to 2
Keep a standing list of recurring journals with their basis of calculation. A journal nobody can explain is a finding waiting to happen.
- 3
Accounts Assistant reconciles every bank account to the statement and documents any unreconciled items.
Accounts Assistant
Timing: Working day 2
Unreconciled items get named, aged, and owned. An unexplained difference carried forward silently compounds.
- 4
Accounts Assistant reconciles the control accounts: receivables, payables, payroll, VAT or sales tax, and intercompany.
Accounts Assistant
Timing: Working day 2 to 3
- 5
Accounts Assistant checks whether every reconciliation agrees within the materiality threshold.
Accounts Assistant
Set the threshold in advance and in writing. Deciding what counts as material while looking at the difference is how thresholds drift.
All within threshold: go to step 7
A difference exceeds the threshold: go to step 6
- 6
Accounts Assistant investigates the difference, documents the cause and the correction, and refers anything unresolved to the Financial Controller.
Accounts Assistant
Document the cause, not just the fix. The same difference recurring monthly means the underlying process is wrong, not the reconciliation.
Resolved: go to step 7
Unresolved at working day 4: go to step 11
- 7
Accounts Assistant produces the draft management accounts and the variance analysis against budget.
Accounts Assistant
Timing: Working day 4
- 8
Budget Owner reviews variances in their area and provides written explanations for anything beyond the reporting threshold.
Budget Owner
Timing: Working day 5
Written explanations, in the pack. A verbal explanation in a meeting is not available to whoever reads this in six months.
- 9
Financial Controller reviews the full pack, the reconciliations, and the variance explanations, and records that review.
Financial Controller
Timing: Working day 5 to 6
The recorded review is the control. Someone other than the preparer has to look, and there has to be evidence they did.
Approved: go to step 10
Queries raised: go to step 7
- 10
Financial Controller locks the period and distributes the final management accounts.
Financial Controller
Timing: Working day 6
Locking matters. An open period invites a late adjustment that makes the distributed pack wrong.
- 11
Financial Controller decides how to treat an item still unresolved at the deadline: accrue an estimate, disclose it, or delay the close.
Financial Controller
The decision needs an owner and a written rationale. Quietly carrying an unexplained balance is the worst of the three options.
Estimate accrued: go to step 7
Close delayed: go to step 6
Change these before you use it
- Set your own materiality threshold in step 5 and your reporting threshold in step 8, both in writing before you next run this.
- Replace the working-day timeline with yours. The sequence matters more than the specific days, but the days are what make it enforceable.
- List your actual recurring journals in step 2 and your actual control accounts in step 4. Generic versions of those steps are not followable.
- If you consolidate across entities or currencies, add the translation and elimination steps explicitly; they are the most commonly undocumented part of a group close.
- If you are audited, confirm the evidence your auditor expects for the step 9 review and make sure this procedure produces exactly that.
This is a starting point, not compliance advice. It is written to be adapted, and a procedure that touches access, money, or customer data needs to match how your business actually operates and whatever rules apply to you. Use it as a first draft to edit, not a policy to adopt.
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