End of Year Procedures for General Ledger

Here are a few reminders for you, as end-of-year procedures for your General Ledger:

1. Ensure that you have completed everything you need to do in the other modules:
   1. Time & Cost:  Produced all invoices (and written off any timesheets you will never invoice), and run all integrity checks.  Then run a Residual WIP report (of what's left after all invoices have been done), and a Control Report for the full year.   The Control Report for the full year is handy as a basis for calculating Opening and Closing "WIP at cost" (if you do this by applying a simple scaling factor to the "Chargeable WIP" totals.  Alternatively, you could run a highly consolidated "Daily / Weekly / Monthly Summary" of just your residual WIP at year-end, and turn on the "Cost and Gross Profit" columns to give you a more accurate "WIP at cost" figure - although you probably can reduce the "Total Cost" further, because the "cost rates" for staff are usually inflated by an adjustment factor for annual leave and other unavailable (or perhaps all non-chargeable) time.
   2. Debtors:  Entered all receipts, written off Bad Debts, produced statements, run all integrity checks (including "General Ledger Reconciliation", and printed off all reports - including Aged Balances at year-end, and a Control Report (and perhaps Summary of Activity) for the full financial year.  (If you are not concerned for trees, you can print off an outstanding transaction report sorted by Client / Debtor (as a group heading, and sub-sorted by date), which will give you a full audit of what is behind the Aged Balances Report.)
   3. Creditors:  Entered all supplier invoices, payments, and journals for the old year, run all integrity checks (including "General Ledger Reconciliation", and printed off all reports (including Aged Balances at year-end, a Summary of Activity for the full financial year, and Transaction Analysis by GL Code).
2. Ensure that you are running the latest version of the General Ledger software.  (This should be the case if you are running our 2012 version, which has automatic updates.)
3. Ensure that you have entered all transactions from your cheque book butts, and bank statements (especially bank fees, direct debits, and APs and other electronic payments not processed through Creditors).   Note:  If you are running our AutoBank module, ensure that you have imported your latest electronic bank statements, coded all transactions appropriately, and run its automatic bank reconciliation.
4. It is a good idea to run various integrity checks in the GL:   See the "Special > Routine Checks" page tab in the Windows GL.
5. Reconcile all bank accounts (including credit card accounts) with your bank statements using the Bank Reconciliation facility.  (Run the Bank Reconciliation report, to give you an audit trail of all un-presented cheques (and any other non-presented items) at year end.)
6. If you have one or more bank loans, ensure that these reconcile too (both the outstanding principle in your balance sheet account, and interest payments during the year).
7. Are there any residual items in your "Suspense" account(s) that need to be coded to their correct account codes (using Bank Reconciliation or by raising journals).
8. Were there any assets that need to be written off because they failed during the year and couldn't be repaired or sold?
9. Have you entered journals for Depreciation and other end of year accruals (e.g. Closing WIP, Closing Stock-on-Hand, etc.) ?  Note:  Many users leave these for their accountant to calculate, and enter them retrospectively after the formal annual accounts have been finalised and submitted to IRD by your accountant (which may be several months down the track).
10. Note that "Bad Debts" should be processed in the Debtors module (with an entry in the Company Minute Book made on or before 31 March to be strictly legal with IRD), and posted into the GL along with other Debtors transactions.
11. Do you need to raise journals to director's current accounts for any "Home Office" expenses?
12. Do you raise journals to director's current accounts for "contributions" to cover "benefits" received during the year (from private use of vehicles and entertainment)? - i.e. instead of paying FBT on them,
13. Have you entered transactions matching ACC Levies and Earner Premium on any lump sum amounts paid to directors that did not have these deducted at the time (through your payroll system)?
14. Are there any other special "book adjustments" that need to be done?
15. Have you checked (and perhaps rationalised) the respective accounts for your Directors?  Note the differences between "Director's Current Accounts", "Repayment of Director's Loans", "Directors Drawings", "Dividends", and "Director / Shareholder Salaries".  Check whether you have not coded any items to "Drawings" or "Loan Repayments" that should be treated as Directors Fees / Salaries (and shifted up into appropriate accounts for this purpose (see the "5600" series in our standard Chart of Accounts) so they appear in your "Profit and Loss" report), or vice versa.
16. Run a "Profit & Loss Analysis by Year" report spanning the last few years, and check through it to see if it shows up any end-of-year item that you have overlooked (i.e. are missing in this year's column), or amounts that are much less than previous years (indicating that you may have coded something in the current year to the wrong account).
17. Check that your Opening Balances (for the start of the year) are what they should be.  Print a Statement of Position report that includes a column for the previous year.  Check that this both balances to zero, and reconciles with your official Statement of Position (Balance Sheet) as at the end of your previous financial year (that was sent to IRD).  If it doesn't (usually because your accountant did some additional journals after you sent him/her your data and rolled over last year), you should bring your previous year into line with your accountant.  (Ideally, you should have done this as soon as your accountant finished, so that your monthly / quarterly management reports gave the best information possible during the current year.)  In the Windows GL it is much better to do these adjustments as double sided journals, as this gives you a good audit trail.  However (if your accountant can't easily provide the breakdown - or it is too complicated), you can get the software to help you raise single-sided adjustment journals for "manually entered year-end closing balances" through the special facility for this purpose (see "Special > Finalize End of Year" - note that you are entering closing balances for the previous year).  Regardless of which method you use, you will then need to finalize the old year again (and run "Check for mis-matched Year-End balances" too for good measure - see the "Special > Routine Checks" page).   Important Note:  Your figures for the Debtors and Creditors control accounts should reconcile with your Debtors and Creditors ledgers, and are therefore probably more accurate than your accountant.  So if your accountant's final figures differ from yours, you are better to code the adjustments to special "Year End Debtors" and "Year End Creditors" accounts (so that they are easy to identify next year, and don't destroy the integrity between your Debtors/Creditors ledgers and the GL).
18. Print a Trial Balance Report for the full year, showing both "Current Period" and "Year To Date" as "Double" columns. Ensure that respective Debit and Credit columns balance to zero. Check that all lines/accounts in the report are sensible.  Does "Trade Debtors" YTD total reconcile with the Debtors Aged Balances Report (or Control Report) as at 31 March?  (If you are running our Creditors module, does this reconcile also?).
19. Print Bank Reconciliation Report(s) - which list unpresented cheques, and provide accrued totals which should reconcile with the YTD balance for the respective bank accounts in the Trial Balance Report.  Print two extra copies of the Bank Reconciliation report for each individual bank account, and file them with bank statements for each year (i.e. end of one and start of the next).
20. Print Profit & Loss, Statement of Position, and all other GL reports you require.  (The Tabular P&L reports by month or spanning several years can be quite valuable for management purposes.)   Do you want a full printed transaction audit trail by account, or is backup media cheaper than trees?  If you have a "Print to PDF" capability, it is really good for things like this - and the best way to send the full transaction history to your accountant.  (Because the Windows GL retains transactions from previous years, you can print earlier transaction histories any time you like.)
21. Produce extra copies of the above reports for your accountant (Bank Reconciliation Report (all bank accounts in the one report), Trial Balance, Profit & Loss, and Statement of Position).  It is a good idea to print these to PDF files (saved in an appropriate folder for your own easy access and reference later), so that you can email them to your accountant together with a PDF file of the full transaction audit report by account for the entire year.
22. Step through the "Finalize End of Year" flow-chart under the "Special" page tab (you can skip over the reports if you have already run them).
23. Lock Periods (see "Tools > Administrator" Menu) for the GL up to the end of the financial year you have just finished.  This will prevent any accidental transaction entry dated in the old year.  Note:  If your accountant subsequently sends you adjusting journals for the old year (or if you wish to raise some single-sided journals to make good the formal set of accounts that was filed with IRD), then you will need to briefly "unlock" these periods again in order to do this.

Special extra items for the few who are still running the DOS GL

1. The last release of the old DOS GL-Cash was version GE108 on August 2001
2. Ensure that you have imported all transactions from the Debtors Module - and Creditors if you have it.  If you didn't remember to import all your transactions from Debtors (and Creditors) for the old year before you started entering transactions for the new year, you should turn on "Future Periods" in the GL Configuration before importing the mixed years (and keep this setting till you have rolled into the new year).  Note:  With our Windows GL you don't need to worry about any of the above, because transactions are immediately passed through to it from the Debtors & Creditors modules, and it doesn't delete transactions when you run the year end roll-over.
3. Don't forget to run the "Recalculate Current Year Balances" - see "Client Housekeeping Menu" option 5.)
4. Check that your Opening Balances (for the start of the year) agree with your accountants closing balances for the previous year.  Run a Trial Balance report for just Period "99".  Adjust your opening balances by raising journals for the Period "99" to bring the "Period 99 Trial Balance" report into line with your formal accounts for the previous year (as filed to IRD).
5.  With the DOS version, it is probably sensible to print off a complete history by account, because it deletes all transactions for previous years during the end-of-year process.
6. Print "List of Accounts with Invalid Parameters" (see Menu 3.9.2 "Chart of Accounts Reports Menu"). Fix any accounts that have not been defined correctly.
7. In the "Account File maintenance Menu" ensure that "Income Allocation" is fully defined (100%).  If you normally have this set to zero so that your "User Defined" reports work correctly, you will need to set this back to zero again after you have done the end of year roll-over.
8. Have you been running Bank Reconciliation into the new year, with "future" transactions?  If so, it is a good idea to unreconcile any cheques that were unpresented at year-end. (This will ensure that they are carried forward into the new year for an audit trail.  After you have done the roll-over, you can then reconcile them again.)
9. Make at least two backups - preferably to different media. (Also, using Windows Explorer, you should make a simple copy of the GL "Clnt1" data folder - and rename it to "Mar2007").  If the data resides on a server, an extra copy to your local hard disk is pretty sensible too.

Note: With the DOS version, you need to make plenty of backups, because all reconciled transactions from the old year will be deleted during the roll-over process.  (With our new Windows GL all transactions from earlier years are retained - which is very handy when you need histories spanning several years for queries about Director's loans or current accounts, or need to track down when an asset was purchased.)

Having done all the above, you should be ready to roll your GL into the new year.  Because it is something that you only do once per year, and never really get familiar with, it never hurts to give us a call, and have us do it together with you using remote support software (i.e. the UltraVNC facility from our website, or Windows Remote Assistance, NetMeeting, etc.).  And we don't mind helping you with this (if you don't mind paying for our time).

 

If you need further assistance or have feedback you would like to give us, please contact the our Help-Desk:

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