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YEAR END ACCOUNTING AND VERIFICATION CHECKLIST

1. BANK ACCOUNT

As soon as possible after the year end,

• 1.1. Ensure you have bank statements for all bank accounts used by the business.

• 1.2. Reconcile these bank statements to the relevant "Bank" ledger accounts.

• 1.3. Before printing these reconciliations, check through all "outstanding" (uncleared) items to ensure that:

• 1.3.1. The receipts/payments actually exist and are correct.  If there are any such items, please cancel them.

• 1.3.2. They are not stale. (older than six months)  Any stale payments must be reversed.

• 1.4. Print out and retain a copy of the bank reconciliation for each bank account and attach a copy of the last bank statement of the month to this reconciliation.

• 1.5. File these documents in a "Year End" file.  This will be used either by the external auditors or the business' accounting officer to assist in certifying the annual financial statements.

2. CASH ON HAND. (CASH CONTROL)

• 2.1. At the end of the last business day of the year (or the morning of the next before start of business), conduct a thorough cash count of all cash on the business premises.

• 2.2. Note how this cash is made up in terms of cash/cheques etc on a page entitled "Cash on Hand".

• 2.3. If a Petty Cash float is carried by the business, ensure that the amount of cash on hand is reconciled to the float and that all petty cash expenses up to the end date are reimbursed.  The amount of actual cash should be equal to the float.

• 2.4. Reconcile this balance to the general ledger "cash control" balance and attach a copy of the cash count sheet and cash-on-hand reconciliation statement to the year end file.

   

3. ACCOUNTS RECEIVABLE (DEBTORS)

• 3.1. Ensure that all payments from customers to year end have been processed.

• 3.2. Ensure that all sales invoices/credit notes have been processed as well.

• 3.3. Print out a copy of the debtors aged analysis as at the year end and scrutinize it for any potential bad.  If authorized to do so, write off any such bad debts to the bad debts expense account. Create a separate list of these debts along with the reasons why each one is considered to be bad, and file this list in the year end file.

• 3.4. Create a list of any debts which are considered to be doubtful. (not yet bad.)  File this list in the year end file after creating the following journal entry in respect of the total value: debit Doubtful Debts expense, and credit Accounts receivable control account.

• 3.5. Re-print the aged analysis of outstanding debtors after it has been agreed to the general ledger control account, and file in the year end file.

   

4. ACCOUNTS PAYABLE (CREDITORS)

• 4.1. Ensure that all deliveries of goods up to and including the last business day of the year have been entered into the accounts system, even if the relevant suppliers bill has not been received.

• 4.2. Ensure that all payments to suppliers have been entered into the system.

• 4.3. Ensure that Suppliers' statements are received for every supplier used by the business.

• 4.4. Reconcile these statements to the detailed suppliers' accounts in the ledger, noting any outstanding items – payments, bills, credit notes etc – and make the necessary adjustments.

• 4.5. Print out a Suppliers' aged analysis as at the end of year and file in the year end file.

5. ACCRUALS AND PROVISIONS 

• 5.1. Accruals should only include those amounts which may be charged to the business at some later date for work done in respect of the current financial year (like accounting and audit fees); or amounts payable in respect of wages which are due at year end but only paid in the ensuing year.  Create a list of these accruals, including the method of calculation, and file in the year end file. (attach copies of supporting documents if available)

• 5.2. Provisions should only include those amounts which are due by the business at year end but which may not necessarily be paid out in the ensuing year. (like leave pay and staff bonuses). Create a list of these provisions, including the method of calculation, and file in the year end file. (attach copies of supporting documents if available)

• 5.3. Please ensure that as many amounts owed by the business are included in the Creditors (accounts payable ledger) as this will minimise the number of year end accruals required.

   

6. CONTROL ACCOUNTS

• 6.1. Debtor control account should tie to aging list.

• 6.2. Creditor control must tie to creditor aging list.

• 6.3. Stock control account must tie with total counted value after adjustments.

7. VAT CONTROL

• 7.1. Ensure that the total value of VAT output (sales) as reflected on all the VAT returns during the year agrees with the total value of net sales as reflected in the income statement of the business.

• 7.2. Ensure that the total value of all inputs claimed  on all the VAT returns during the year, in respect of the purchase of capital goods (fixed assets), agrees with the value of assets purchased in the fixed assets register of the business.

• 7.3. Ensure that the VAT payable in the ensuing period after year end agrees with the amount reflected in the control account.  File a copy of this VAT return, along with the sales and capital goods reconciliations, in the year end file.

   

8. LOANS 8.1. 

INTEREST-BEARING LOANS

• 8.1.1. Ensure that statements are received for each loan account.  The statement should clearly reflect the total outstanding balance and the value of finance charges outstanding (deferred).

• 8.1.2. Reconcile these balances to the general ledger loan accounts and make the necessary adjustments.

• 8.1.3. File copies of these statements in the year end file.

• 8.1.4. Where no statements exist (in the case of personal loans), calculate the interest due during the year and make the necessary adjustments.  Prepare loan statements in respect of these loans as in 8.2.1. below.

8.2. NON-INTEREST-BEARING LOANS

• 8.2.1. Prepare loan statements in respect of each such loan reflecting the total amount owed to the lender, and make provision on the statement for the lender to sign as confirmation of the amount and terms of loan.  Get the statements signed and file in the year end file.

   

8.3. CURRENT PORTION

• 8.3.1. Calculate the current portion of capital repayments on these loan accounts. (the amounts due within the ensuing twelve months)

• 8.3.2. File a schedule of these current payments in the year end file.

   

9. FIXED ASSETS

• 9.1. Fixed asset registers are a statutory requirement for all private companies and close corporations.  We suggest that it become good business practice for trusts and sole proprietorships as well.

• 9.2. Ensure that the fixed asset register is up to date and the total cost of each of each category of asset agrees to the value reflected in the relevant general ledger accounts.

• 9.3. The owner/trustee/member/shareholder of each business is required to place a market value on each asset, which value is to be reflected in the balance sheet.  This value should be as realistic as possible.  In the case where assets need to be scrapped as they are no longer used, make the necessary adjustments in both the register and the general ledger.

• 9.4. Check the depreciation calculations during the year and reconcile the expense and provision accounts to the general ledger.

• 9.5. Make copies of all fixed asset acquisitions during the year and file in the year end file.

• 9.6. Print out a copy of the fixed asset register and file in the year end file.

   

10. OTHER ASSETS AND LIABILITIES

• 10.1. Ensure that all suspense accounts have been reconciled and balances reallocated.

• 10.2. Make copies of any documents pertaining to any other asset/liability not mentioned above and file in year end file.

   

11. STOCK ON HAND

• 11.1. If relevant, print out a stock take worksheet from the accounts system and use it to do a physical count of all stock on hand.

• 11.2. Compare actual quantities to ledger quantities and investigate material variances.  Once authorized to do so, make the necessary adjustments to the ledger stock figures.

• 11.3. Check that cost prices of all stock on hand are reasonably correct, bearing in mind that accounting systems can value stock on the average, FIFO or LIFO basis.

• 11.4. Ensure that the ledger stock asset account has no negative quantities.

• 11.5. Ask management to review stock on hand to ensure that any slow-moving or obsolete stock is either devalued or written off.

• 11.6. Print out a stock valuation summary and file in the year end file.

   

12. EXPENSES

• 12.1. Review all regular monthly expense accounts, viz. rent, electricity, telephone, bank charges, lease charges etc., to ensure that there are 12 entries – one for each month – recorded in the year.

• 12.2. Analyse the "legal expenses" account and separate all legal costs which are of a capital nature (property transactions) and related to disputes, as these are not normally tax deductible.  Keep debt collection legal costs in a separate "debt collections" expense account.

• 12.3. Analyse the "insurances" account to ensure that all charges are directly related to the business and that no personal insurances of members are included.

• 12.4. Generally review all expense accounts to ensure that no capital expenditure has been included. Eg. Computer software, hardware, plant & equipment etc.

   

13. GENERAL

• 13.1. Once all the relevant adjustments have been made, ensure that no one can post any transactions to the year under review, and then "close the books' on the financial year.

• 13.2. Extract a Trial Balance and submit, along with the year end file, to the accounting officer/auditor.