Fast Close: A Guide To Closing The Books Quickly

by Steven M. Bragg (Premier Data Services )

• ISBN13: 9780471708971
• ISBN10: 0471708976
• Format: Hardcover
• Copyright: 2005-06-01
• Publisher: WILEY

Summary

Written for controllers, CFOs, accounting managers, and business managers, Fast Close incorporates Steven Bragg's own personally tested guidelines to help professionals speed up the closing process, especially in response to Sarbanes-Oxley's more time-sensitive requirements. Bragg outlines numerous key improvements that, when gradually implemented together, are guaranteed to shrink the closing process down to as little as one day. Chock-full of helpful flowcharts and checklists to help readers prevent delays and bring accounting department closing procedures up to date, Fast Close explores specific instructions for closing faster, common areas of delay and how to overcome them, required controls to keep financials accurate despite the fast close, and much more. Create financial statements faster . . . much faster . . . with the expert guidance found in Steven Bragg's Fast Close.

Author Biography

STEVEN M. BRAGG, CPA, CMA, CIA, CPIM, has been the Chief Financial Officer or Controller of four companies, as well as a consulting manager at Ernst & Young. He is the author of more than nineteen Wiley titles.

Table of Contents

Preface	xv
Introduction	1	(8)
Different Types of Fast Close	1	(1)
Benefits of the Fast Close	2	(1)
Legal Issues Impacting the Fast Close	3	(1)
Steps to Achieve a Fast Close	4	(5)
Your Current Closing Process	9	(14)
Traditional Closing Process: Basic	9	(5)
Additional Closing Tasks for the Multidivision Company	14	(1)
Additional Closing Tasks for the Multinational Company	15	(1)
Additional Closing Tasks for the Public Corporation	16	(1)
Problems with the Closing Process	16	(7)
Conducting a Review of the Closing Process	23	(14)
Steps in the Process Review	23	(4)
Payables Process Review	27	(1)
Billing Process Review	27	(3)
Inventory Process Review	30	(1)
Cash Process Review	30	(1)
Final Closing Process Review	31	(4)
Total Duration of the Closing Process	35	(2)
Alter the Timing of Closing Activities	37	(20)
Altering the Closing Mindset	37	(1)
Review and Correct Subledger Transactions Throughout the Month	38	(1)
Complete the Bank Reconciliation Every Day	38	(1)
Review Uncashed Checks	39	(1)
Update the Inventory Obsolescence Reserve	39	(1)
Determine the Lower of Cost or Market	40	(1)
Calculate Overhead Allocation Bases	40	(1)
Bill Recurring Invoices	41	(1)
Conduct a Preliminary Comparison of the Shipping Log to Invoices Issued	41	(1)
Review Preliminary Rebillable Expenses	42	(1)
Update the Bad Debt Reserve	42	(1)
Review Preliminary Billable Hours	43	(1)
Accrue Interest Expense	43	(1)
Determine Pension Plan Funding	44	(1)
Determine Flexible Spending Account Funding	44	(1)
Accrue Unpaid Wages	45	(1)
Accrue Unused Vacation Time	45	(1)
Accrue Travel Expenses	46	(1)
Reconcile Asset and Liability Accounts	47	(1)
Calculate Depreciation	47	(2)
Compile Preliminary Commissions	49	(1)
Review Financial Statements for Errors	50	(1)
Complete Selected Financial Reports in Advance	50	(1)
Deferred Closing Activities	51	(6)
Revise the Contents of the Financial Statements	57	(6)
Alter the Mode of Report Delivery	57	(1)
Standardize Reports	58	(1)
Eliminate Cost Reporting from the Reporting Package	59	(1)
Separate Metrics from the Financial Reporting Package	60	(3)
Optimize the Use of Journal Entries and Chart of Accounts	63	(10)
Eliminate Immaterial Journal Entries	63	(1)
Standardize Journal Entries	64	(1)
Convert to Recurring Journal Entries	65	(1)
Centralize Use of Journal Entries	66	(1)
Use Journal Entries to Accrue Expenses Delaying the Close	67	(1)
Automate Journal Entry Postings	68	(1)
Use Accruals Only for External Reporting	68	(1)
Define Accounts	68	(1)
Standardize the Chart of Accounts	69	(1)
Automate Eliminations of Intercompany Transactions	70	(3)
Standardization and Centralization	73	(10)
Impact of Standardization on the Closing Process	73	(2)
Impact of Centralization on a Multilocation Accounting Department	75	(3)
Impact of Centralization on a Single-Location Accounting Department	78	(1)
Incorporating Standardization and Centralization into Acquisition Activities	79	(4)
Closing the Inventory Function	83	(28)
Create an Inventory Tracking System	83	(5)
Implement Cycle Counting	88	(4)
Reduce the Amount of Inventory	92	(10)
Properly Record the Lower of Cost or Market Rule	102	(1)
Reviewing Obsolete Inventory	103	(2)
Preventing Obsolete Inventory	105	(6)
Closing the Billing Function	111	(8)
Bill Recurring Invoices in the Preceding Month	111	(1)
Computerize the Shipping Log	112	(1)
Eliminate Rebillable Expense Processing from the Core Closing Period	113	(1)
Eliminate Month-End Statements	114	(1)
Print Invoices Every Day	115	(1)
Transmit Transactions via Electronic Data Interchange	116	(3)
Closing the Payroll Function	119	(12)
Automatically Calculate Commissions in the Computer System	119	(1)
Simplify the Commission Structure	120	(1)
Install Incentive Compensation Management Software	121	(1)
Post Commission Payments on the Company Intranet	122	(1)
Avoid Adjusting Preliminary Commission Accrual Calculations	123	(1)
Use a Computerized Time Clock	124	(1)
Use a Web-Based Timekeeping System	125	(1)
Automate Vacation Accruals	126	(2)
Merge Sick Time into Vacation Time	128	(1)
Cap the Amount of Vacation Time to Be Carried Forward	128	(3)
Closing the Payables Function	131	(32)
Automate the Month-End Cutoff	131	(1)
Pay Based on Receiving Approval Only	132	(3)
Automate Three-Way Matching	135	(1)
Reduce Required Approvals	136	(2)
Use Negative Assurance for Invoice Approvals	138	(1)
Use Procurement Cards	139	(6)
Have Suppliers Include Their Supplier Numbers on Invoices	145	(1)
Receive Billings Through Electronic Data Interchange	146	(1)
Request That Suppliers Enter Invoices Through a Web Site	147	(1)
Audit Expense Reports	148	(2)
Automate Expense Reporting	150	(2)
Link Corporate Travel Policies to an Automated Expense Reporting System	152	(1)
Issue a Standard Account Code List	153	(1)
Link Supplier Requests to the Accounts Payable Database	154	(2)
Automate Payments for Repetitive Processing	156	(1)
Eliminate Manual Checks	157	(1)
Use a Signature Stamp	158	(1)
Ignore Supplier Invoices and Pay from Statements	159	(1)
Issue Standard Adjustment Letters to Suppliers	160	(3)
Closing the Cash Processing Function	163	(8)
Access Bank Account Information on the Internet	163	(1)
Avoid Delays in Check Posting	164	(1)
Collect Receivables Through Lockboxes	165	(2)
Install a Lockbox Truncation System	167	(1)
Access Online Check Images from a Lockbox	168	(1)
Consolidate Bank Accounts	168	(3)
Impact of Automation on the Closing Process	171	(12)
Principles of Fast Close Automation	171	(1)
Implement Minor Programming Changes on an Ongoing Basis	172	(1)
Automate General Ledger Interfaces	173	(1)
Install a Web-Based Timekeeping System	174	(1)
Install a Workflow Management System	175	(2)
Install Consolidation Software	177	(1)
Install a Data Warehouse	178	(1)
Install an Enterprise Resources Planning System	179	(4)
Ongoing Improvements in the Closing Process	183	(6)
Ongoing Improvement Process	183	(3)
Improvement Measurements	186	(3)
Appendix A Comprehensive Closing Checklist	189	(4)
Appendix B Fast Close Policies and Procedures	193	(12)
Appendix C Soft Close Checklist	205	(4)
Appendix D Year-End Close Checklist	209	(4)
Index	213