It’s that time of year; Are you ready? Accountants are always busy, but year end and tax time are always the busiest. “Year End” typically finds us working on our normal every day responsibilities, accompanied by a project or two, simultaneously preparing for the year end audit (for those companies that are required to have an audit performed). This year, we have another challenge and that is IFRS. “The Canadian Accounting Standards Board has set January 1, 2011 as the official date for publicly accountable enterprises to begin using International Financial Reporting Standards(IFRS) ” as stated on “TheGAAP.net” website. In addition, 2010 comparatives are required for use in the 2011 Statements. We, of course, will complete everything correctly and on a timely basis; however, at what cost; limitless nights, and weekends.

Year Ends I’ve worked on have ranged from working solely on the year end for a Client to one where I held the most Senior Position in Accounting, within a large organization; working at capacity without a moment to spare, and having to contract the services of a Consultant to undertake the year end completely with the exception of having the final review; which I did. In this case, the Consultant was also our Liaison to the Auditors; both internal and external. What ever the situation; a successful year end and audit always begins with a good plan.

This is also the point where you determine; if you have time required for the Year End and audit if required, or will contract someone with the background to work with. This someone will need to be a team player, with excellent communication skills, and enough knowledge to work well while requiring very little of your time.

The Plan should include: what needs to be done, when, how, and by whom? Begin with contacting your External Auditors to determine what they require, by when, and in what form. (Soft or hardcopy)

Contact your Internal Auditors (For those organizations who have them) if you’ve been saddled with both audits at once. The bad news is you’ll have two sets of requests to do; the good news is, many of the requests may be similar, reducing the time of completing requirements of both audits.

Once you have the deadlines, list them on a sheet of paper, word document, or a spreadsheet. The following is an example of an Audit Schedule produced in Excel:

Call or E-mail me if you’d like a blank template forwarded to you. Contact details are at the end of the article.

Once you’ve completed the above Audit Schedule, review it to make sure everything that’s required is listed. Are the right people on each task? Do the designated people have the time, do the dates conflict with other deadlines. Once you’ve completed your review, and made any necessary changes, call a meeting of all those involved, hand out a copy to each and ask them if they have any thoughts on the matter. More times than not, the team will accept it as is. I have found no better source of success on any project than seeking and attaining a team’s “buy in”. After all, in most cases, your team will be completing the scheduling, making copies of documents, preparing reports, answering questions, etc. This is also a good time to reiterate that the Year End Financial Statements are the most important ones produced and issued, therefore it’s imperative that accurate recording of what’s occurred over the year is captured. Most investors will look at these statements, managers use them as a source of comparison with future statements, and they’re relied for the main source of decision making. More often than not they’re also used for tax purposes.

The power of a “buy in” by team members is insurmountable. I’ve seen many examples; for instance while completing a project at one of my Clients. The Director of Finance who contracted my services for a senior Controllership position made a request to have me coordinate the Month End Schedule to ensure that Canada’s Financial Statements were reported to the Parent Company on time. A new Hyperion reporting system had been implemented months before, and the person responsible was new, and still learning, plus the information getting to her was consistently late. The Accounting Department did have a Month End schedule; however, month after month, they were out 2 or more days. I reviewed the month end requirements including the timing and then went from one person to another to discuss their individual responsibilities. There were numerous departments, Managers, Supervisors, etc that were part of this schedule; 40 in fact. By the time I was finished we had a revised Month End schedule taking each person’s concerns into account, while maintaining the final deadline. With everyone’s input; the Schedule was finalized, and a meeting was called. We informed everyone that the Director of Finance has required the financial results be delivered to the Parent Company by the chosen date. I then asked everyone, one by one, if they were o.k. with the revised schedule. Everyone was; however, when I got to the last person on the schedule I was told that there were second thoughts and they’d require the information a day earlier. I asked for clarification and was told that as the newest team member, they still required some time to get familiar with the system. We decided on two things; the 2 people who were preparing the information for the final person agreed to provide the information a half a day earlier, and I agreed to help the final person (gaining the approval from that Manager of that department who was there) through her learning curve as I had familiarity with the system.  On our second month, and every month to follow, we hit our targets. Their participation and buy in is certainly the reason we met our deadline.

It is important to make sure everyone is acquainted with what is required, what they should provide, and what form to provide it in. You can familiarize everyone by making available last year’s Year End & Audit binders where requirements for this year have not changed. (Make sure you remove any sensitive material first.) This is a great time to clean up all the Balance Sheet Reconciliations; for instance, identifying all reconciling items, even those we’ve labeled “misc.”. This is also a good time to remind everyone not to let reconciling items that must be further analyzed, or adjusted accumulate because, eventually, they must be attended to, and there is little time for this at the busiest time of the year; year end. This is an article in itself. The frequency of preparing each individual general account reconciliation should be determined. This is based on the importance of each general ledger account. For instance the Bank Account must be completed monthly; whereas, something of less significance for an organization may be done: Quarterly, Semi-Annually, or even Yearly. Note: An article to describe an electronic system that has been successfully implemented by several major companies that gives management quick and easy control over their account reconciliation process will be published in an upcoming "The Business Zeitgeist" Newsletter issue. This system has been approved by a major public accounting firm as a way to reduce auditing and control costs, and another major benefit is that it works by using your existing software.

Again, at Year End; let the team know the importance of having reconciliations, statements, etc. be correct. Try month over month, year over year, trend analysis to ensure everything is correct.

For this discussion, I’ve made the assumption that the addition of IFRS has made it impossible for you to handle this project also so, in this case, you’ve contracted the services of a senior person to work with you on Year End. He/She will: gather, co-ordinate or prepare schedules, and then review them with the exception of anything you believe is highly sensitive. At this point they are placed in the Year End binder and given back to you to peruse, review, approve, and sign off on at your pace.

Written by: Paul J. Calleri, CMA of Paul J. Calleri, Consulting, Principle of “TheGAAP.net” – Principle and Editor of “The Business Zeitgeist” and the “IFRS Zeitgeist” newsletters.

Please note: Please share your comments and any tips you have to improve everyone’s Year End:  pcalleri@thegaap.net