Month and Year-End Accounting Reconciliations
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Accounting Reconciliation
Imagine being an architect and drafting a blueprint for a skyscraper. Each line, measurement, and element must be precise and perfectly aligned so that when the structure is built, it will be strong and stable to withstand the test of time.
As a business owner, accounting reconciliation is your blueprint. How so? Just as a blueprint results in a well-built structure, correct accounting reconciliation results in a strong business. It ensures financial accuracy, regulatory compliance, and a solid foundation for informed decision-making and business growth.
We cannot overstate the significance of business owners keeping accurate financial records!
Accounting reconciliation is particularly important. It’s the comparison of two sets of financial records to check that they are in sync and correctly reflect a business’s financial transactions. It’s like making sure the numbers on your scoreboard tally with the points you’ve scored in a game.
This process is essential for detecting errors, preventing fraud, and complying with Australia’s regulatory standards.
Month-End Accounting Reconciliations
Month-end reconciliations are critical in ensuring the accuracy of financial records. The process involves many steps, from reviewing accounts for discrepancies to billing and recording all open invoices.
Take the guesswork out of the equation by choosing our team of experienced accountants to handle these reconciliations for you. We’ll thoroughly review your records so you can rest easy knowing your financial data is correct and up-to-date.
What steps are typically involved in the month-end reconciliation process?
Month-End Accounting Reconciliations
Month-end reconciliations are critical in ensuring the accuracy of financial records. The process involves many steps, from reviewing accounts for discrepancies to billing and recording all open invoices.
Take the guesswork out of the equation by choosing our team of experienced accountants to handle these reconciliations for you. We’ll thoroughly review your records so you can rest easy knowing your financial data is correct and up-to-date.
What steps are typically involved in the month-end reconciliation process?
Step 1: Gather Financial Documents
First, we gather all the necessary financial documents, including bank statements, credit card statements, invoices, and receipts. You’ll need to have all these documents on hand so nothing slips through the cracks during reconciliation.
Step 2: Review and Update General Ledger
A general ledger is a collection of all financial transactions for your company. It’s the backbone of financial records, so it must be accurate and updated regularly.
In this step, we review and compare your general ledger against the documents collected in Step 1.
Step 3: Reconcile Bank Statements
At this stage, we compare your company’s cash account records to its bank statements to confirm the cash balance and identify errors or unauthorised transactions. We’ll carefully match each transaction and investigate any discrepancies.
Step 4: Reconcile Credit Card Statements
Similarly to bank reconciliation, we’ll reconcile credit card statements with the transactions recorded in the accounting system. We verify expenses, payments, and fees to keep your credit card records up-to-date.
Step 5: Review Accounts Receivable and Payable
We then review the accounts receivable to see if all payments received are recorded, and the balances are accurate. We’ll also examine accounts payable to confirm all outgoing payments are documented, and no liabilities are overlooked.
These steps will help give us a clear picture of whether your company’s records reflect its financial position.
Step 6: Adjust Journal Entries
Now is when we make any necessary adjustments to the accounting records. Such could include recording expenses incurred but not yet paid, revenue earned but not received, or correcting any identified errors.
Thorough and transparent records are crucial for compliance with Australia’s accounting standards.
Step 7: Generate Financial Reports
Once we’ve reconciled all the accounts and made the necessary adjustments, we’ll generate financial reports for the month-end reconciliation. These reports provide valuable insights into your business’s finances and serve as a solid basis for future decision-making, such as budgeting and forecasting.
Step 8: Review and Finalise
Finally, we review the reconciled accounts and generated reports, again checking that all records are consistent and comply with accounting standards. After the review, we finalise the reconciliation process and close the records for the month.
Without month-end reconciliations, the accounting cycle falls apart.
Let the team at GeekBooks handle this task for you to keep that cycle moving smoothly. That way, you can move forward with a clear understanding of your finances and devote your energy to other areas of your business.
Year-End Accounting Reconciliations
Year-end accounting reconciliations wrap up your business’s financial activities for the entire fiscal year. While some steps may overlap with month-end reconciliations, there are specific tasks to address for an annual review.
Let’s explore the process of year-end reconciliation.
Year-End Accounting Reconciliations
Year-end accounting reconciliations wrap up your business’s financial activities for the entire fiscal year. While some steps may overlap with month-end reconciliations, there are specific tasks to address for an annual review.
Let’s explore the process of year-end reconciliation.
Step 1: Gather Annual Financial Statements
First, we gather all financial statements for the fiscal year, including the balance sheet, income statement, and cash flow statement. These statements provide a comprehensive overview of your business’s financial performance over the year.
Step 2: Review and Analyse Financial Statements
We then thoroughly review and analyse the financial statements to identify any significant trends, anomalies, or irregularities. This step helps in understanding the financial health of your business and identifying areas that may need further investigation.
Step 3: Perform Asset and Liability Reconciliations
During year-end reconciliations, we review all the assets and liabilities on the balance sheet. This review includes verifying the accuracy of asset valuations for proper classification of liabilities and reconciliation of any discrepancies that may have arisen during the year.
Step 4: Assess Depreciation and Amortisation
Both depreciation and amortisation reflect the reduced value of assets over time.
Amortisation is used for intangible assets (such as patents, trademarks, and goodwill), while depreciation is used for tangible assets (such as buildings, machinery, and vehicles) to allocate their cost over their useful life.
In this step, we assess the depreciation and amortisation of long-term assets. We review the depreciation methods used, verify the accuracy of calculations, and make adjustments so your financial statements reflect the value of these assets and the associated expenses over their lives.
Step 5: Evaluate Revenue Recognition and Expense Accruals
Next, we evaluate revenue recognition practices to ensure accounting standards and regulations compliance. Additionally, we’ll review expense accruals to account for any expenses that have not been recorded to precisely reflect the fiscal year’s revenue and expenses.
Step 6: Reconcile Tax Accounts
Tax-related accounts such as income tax payable or receivable must be reconciled during year-end reconciliations. This involves verifying the accuracy of tax provisions, complying with Australian tax laws, and reconciling any differences between financial records and tax returns.
Step 7: Complete Closing Entries
As the fiscal year comes to a close, we perform closing entries to transfer temporary accounts (such as revenue and expenses) to permanent accounts (such as retained earnings). This step helps reset the books for the upcoming fiscal year and prepares the financial statements for external reporting.
Step 8: Generate Year-End Financial Reports
Finally, we generate comprehensive year-end financial reports, including financial statements and accompanying notes. These reports summarise your business’s financial activities, performance, and position throughout the year.
Just as an anchor helps stabilise a ship in storms, year-end reconciliations help stop your business from capsizing.
They allow you to assess the results of your financial activities for the entire year and prepare your business for the next.
Don’t delay jumping ship from managing your reconciliations to handing them over to us. We have dedicated accountants who specialise in year-end reconciliations to relieve you of the stress of this process.
Let's Talk Reconciliations
At GeekBooks, we understand the importance of accurate and timely reconciliations for businesses in Australia.
Our team of experienced professionals will provide expert guidance and support for month-end and year-end reconciliations.
With our deep knowledge of accounting practices and regulations, you can rest assured knowing we’re meticulously reviewing your financial records, identifying discrepancies, and maintaining compliance.
Our comprehensive approach lets you focus on running your business confidently, knowing that your financial foundation is solid.
Ready to take the hassle out of reconciliations with our affordable rates backed by a 30-day money-back guarantee?
Complete the online booking form or call 02 9158 3591 for a free quote today. We’re ready and waiting to provide a tailored solution for your business’s month and year-end accounting reconciliations!
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