Year-end closing
23 Jan

Financial statementsFinancial statements

The annual financial statement work is one of the most important requirements for analysing the development of a company. Therefore, before auditing the annual accounts, you should check the preparatory work. After all, preparation is fifty percent of the rent! Examples include the inventory, opening balance, balance confirmations, buildings/operating equipment and numerous other pieces of information. Therefore, one should think about it in advance so that the year-end closing can start with a good feeling.

Inventory as part of the year-end closing process

the inventory is one of the most important tasks and must be carried out and documented in a timely manner. It requires the recording of equipment, stocks and spare parts. It is important to know here that an increase in inventories increases profit and a decrease in inventories decreases profit.

Documentation

It is therefore necessary to document all transactions of the year concerning fixed assets and stocks. Not only capital assets such as computers, machines, furniture and company vehicles must be documented, but also all merchandise in the warehouse and in production. In addition, a chronological compilation of all account statements must be prepared.

The logbook and overdue accounts receivable deserve special attention during the audit as part of the annual financial statement work. If bad debts are to be expected, they are taken into account as a value adjustment.

Required lists for the annual accounts

In addition to the inventory, there are a number of other required lists and information that must be compiled and submitted with the financial statement work. These include information and listings on:

  • unfinished and finished but not yet invoiced services
  • Sold or scrapped items from the depreciation schedule
  • Planned investments for the next 3 years
  • Company-owned vehicles with number plates and the employees who use them
  • pending lawsuits
  • anticipated warranty-related sales or Services
  • Planned maintenance work in the next 3 months
  • Commission or bonus obligations that will be settled in the next year
  • Holidays not taken by employees at the end of the year
  • dubious requirements
  • bad debts
  • outstanding bills
  • Guarantees or other security measures
  • Residual maturities of commercial loans
  • List of extraordinary business transactions that occurred during the financial year
  • Original donation receipts
  • Land register excerpts for the property items
  • opening balance sheet values

Particularly in the preparation period for the upcoming year-end closing, crucial questions need to be clarified:

  • Are the annual financial statements of the previous year available with all calculation documents?
  • What should be prepared? A commercial balance sheet with a reconciliation statement or a tax balance sheet separate from the commercial balance sheet?
  • What is there to consider in the context of additional supplementary regulations for medium-sized or large corporations?
  • Is the preparation of notes and a management report required?
  • Does the annual result have to be shown either high or low?

Balance confirmations for the year-end closing operations

Also a topic for the annual financial statements: Have been applied to all receivables exceeding a certain threshold, Balance confirmations obtained? Do individual receivables have to be value-adjusted or, in extreme cases, is there a risk of total default on the receivable?

Subsequent acquisition costs

When subsequent acquisition costs are incurred, it must be examined whether they are maintenance expenses that reduce profits or subsequent acquisition costs that can be capitalised.

Merge information

After you have collected and checked all records, lists and documents, you reconcile the information. This includes, for example, bank statements, the cash book and receipts. The accounting records are reconciled with the open claims and liabilities. In addition, it must be determined whether payments have actually been received from the respective customers for the claims filed. The bookkeeping inventory must be reconciled with the Cash book and the bank records. On the basis of the recorded values, the expected claim of the tax authorities can be calculated, which is to be offset against the advance tax payments made. Provisions must be made for any tax liability that may arise. During the preparatory work, not only should the receipts be checked, but any discrepancies and anomalies should also be noted.

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