Month End Control Procedures
The below procedures should be done at each and every month end so that you can better ensure that your internal financial statements accurately reflect your operating results. To gain a regular schedule it is best to “close the month” at a prescribed time such as 12:00 the last workday of each month and then to count all business done after the deadline as that of the next month. At each month end, for the below categories you will want to ensure that you:
- CASH. That at the end of each month that you ensure that all checks issued, deposits received, and any other cash transactions, (i.e., bank charges, automatic debits/payments, letters of credit, etc.) that have been recorded on both your QuickBooks/Accounting package and that they reconcile to the same balances. At the end of each month you will want to review it and all the data entered to do so to ensure its correctness and that your review your canceled checks to ensure all the checks recorded on the bank statement are enclosed and that all the canceled checks are valid expenditures of the business.
- INVENTORY. That you do a physical count of all that you have in the warehouse and accordingly adjust your balance sheet account up or down accordingly and that the offsetting part of the entry will be to cost of sales.
- ACCOUNTS RECEIVABLE. That you bill for all items shipped, close the month, and then run an open accounts receivable report and verifying that you have adjusted to this number on the balance sheet and reconciling why/if the balance sheet balance could be different from that of the detail as they should be the same. At this time please be sure to review the accounts receivable detail in detail verifying that the balances listed by customer are correct. You should start and maintain a file and keeping in it the entire month end open and unpaid accounts receivable reports.
- ACCOUNTS PAYABLE. That you record all items received, close the month, and then run an open accounts payable report and verifying that you adjust to this number on the balance sheet and reconcile why the balance sheet balance could be different from that of the detail as they should be the same. You will want to review the accounts payable detail in detail verifying that the balances listed by customer are correct. You will want to start a file and keeping in it the entire month end unpaid accounts payable reports.
Consistent month end control procedures are critical, as any variance to these will negatively impact the reliability of your internal financial. These are just a few of the tips we give clients each and every day. To gain additional peace of mind today that you have someone looking out for your best interest contact us today at www.HISCPA.com
