Ten checks to run before you close the month
Most close problems are found after the books are closed, when fixing them is slow and visible. These ten data checks catch the common ones while there is still time to correct them.
Month end is a race against the calendar. Under pressure, the checks that would catch an error are the first to be skipped. Then the error turns up in the management pack, or worse, at the year-end audit.
These ten checks run on data, take minutes once set up, and catch the most common close problems before sign-off.
Journals
1. Manual journals above a threshold
List manual journals over an agreed value, with preparer, approver and description. Look for missing approvals and vague descriptions.
2. Journals posted by unusual users
Postings by people who don't usually post journals, or by system and admin accounts.
3. Journals on weekends, holidays or late at night
Not wrong in themselves, but worth a second look, especially near the close.
4. Round amounts and repeated values
Large, round journals are often estimates. Make sure each has support.
Balances
5. Unreconciled balance sheet accounts
Every material account should have a reconciliation, prepared and reviewed, with old reconciling items explained.
6. Suspense and clearing accounts
These should be empty or nearly so. A growing balance means something isn't being cleared.
7. Intercompany mismatches
Both sides of every intercompany balance should agree. Find the differences before consolidation, not during it.
Cut-off
8. Goods received, not invoiced
Receipts with no invoice need an accrual. Old ones may be errors in the receipt itself.
9. Revenue near the period end
Sales invoiced in the last days of the month and credited in the first days of the next are a classic cut-off issue.
Movements
10. Unexpected changes
Compare each account with last month and the same month last year. Large swings without an explanation go on the list.
Make it a routine
| When | Checks |
|---|---|
| Daily during close | Journals (1 to 4) |
| Before sign-off | Balances and cut-off (5 to 9) |
| At review | Movements (10) |
Run as a fixed routine, these checks shorten the close because problems are found early. Run continuously, they stop being close checks at all and become continuous controls monitoring. CompliBear runs them every day, with each exception sent to its owner.