Meaning
Accounting period that can start on any day of a calendar year but has twelve consecutive months (52 consecutive weeks) at the end of which account books are closed, profit or loss is computed, and financial reports are prepared for filing. It may or may not match a calendar year. Called fiscal year in the US.
Year-End Closing Process
Overview
The Year-End Closing process is a set of activities enabling federal agencies to comply with Office of Management and Budget (OMB) requirements regarding the closing of appropriation accounts, preparing for the next fiscal year, and reporting on those activities.
Year-End Closing Requirements
Agencies are required to:
⦁ Perform year-end closing.
⦁ Perform multiple preliminary year-end closings before final year-end closing while maintaining the ability to post current period activity.
⦁ Selectively generate transactions required by year-end closing procedures.
⦁ Automatically determine an accounting period’s opening balances based on the prior accounting period’s closing balances without user intervention or adjustment.
⦁ Automatically generate fiscal year-end preclosing and closing entries as they relate to fund type.
⦁ Year-End Reporting Requirements
Agencies must:
⦁ Prepare trial balances and other supporting information required for external reports and financial statements, including consolidated financial statements.
Procedures to follow
- Call your auditor and/or tax return preparer to discuss what they expect or need from you for the audit and tax filing process.
- Confirm that all revenues and expenses are recorded in the proper time period under General Accepted Accounting Principles (GAAP).
- Confirm that all approvals, authorizations, and signatures have been documented for necessary items, such as bills, contracts, reimbursements, etc.
- Make any journal entry adjustments as necessary, such as depreciation expenses or new fixed assets.
- Reconcile all bank accounts, credit cards, and money accounts. Make sure balances are equal to year-end statements.
- Confirm that your year-end payroll expenses match up with your monthly payroll taxes in order to prepare the annual IRS Form 940.
- Run a year-end report of your taxable sales and confirm that you have paid all the sales tax required of your company, if applicable.
- Reconcile Federal income taxes paid and State taxes paid, if applicable.
- Prepare fiscal year end trial balance.
- Close out temporary accounts (profit and loss accounts and dividend accounts) to Retained Earnings (or your company’s equity account).
Year ending procedure is vary from one country to country
