Question

Closing entries take place at the end of an accounting cycle. It is a vital part of the accounting cycle to prepare to the company's annual financial statements as well as for the new fiscal year.

-As a manager, what would be your procedure in setting up the closing process? What kind of policies would you put in place to avoid making mistake?

Answer 1

As a manager, I would like to include the following steps in setting up the closing process:

• ​Maker checker concept: Closing journal entries are very critical from control stand point of view. Therefore, all these closing entries should be passed by the person having authority to pass those entries, and in-turn these needs to be reviewed and checked and approved by the person who is senior to him in the concerned role / department.
• Authority Matrix: For each process / department, there should be an authority matrix detailing which persons are having what types of rights i.e. few can have only access/view rights, whereas others can have edit / passing the entry rights depending on the role they are playing in the organisation.

Maker-checker policy is a must to avoid making mistakes. In addition to that there should be FInancial reporting Manager whose responsibility should be to check thoroughly the closing process and make continuous improvements in it to ensure timely closing.