Purpose:
To ensure proper procedures are followed to systematically close out all financial information for the previous fiscal year.
Overview:
The fiscal year runs from October 1st through September 30th. At the end of the fiscal year, all accounts/projects must be reviewed, the Deferred Revenue reports and preliminary financial reports must be prepared, and an independent public accountant must audit the financial statements.
Application:
Summary of the Annual Audit Closing Procedures
A. All fiscal transactions must be recorded and posted. Transactions will be reviewed for completeness by scanning the ending balances and the transactions posted to each general ledger account to detect unusual entries or unexpected ending balances.
B. All general ledger accounts will be reconciled and necessary adjustments made, which will include:
1. Agreeing ending general ledger cash balances to ending bank reconciliation balances.
2. Agreeing the ending accounts receivable balance to the total of the Aged Receivables report.
3. Agreeing the ending accounts payable balance to the total of the Aged Payables Report.
4. Computing bad debt expense, accounts receivable, and allowance for doubtful accounts by using the allowance method.
5. Determining that fixed asset sales are recorded.
6. Capitalizing and amortizing prepaid assets.
7. Calculating and recording depreciation on fixed assets.
8. Recording interest expense on loans and notes payable.
C. All vendor Purchase Orders (POs) must be reviewed. If a PO has been inactive, it should be labeled as such in the accounting system to prevent accidental posting to that PO.
D. The following year-end reports should be kept in order to have a record of historical transactions for the year:
Accounts receivable—
1. Cash receipts journal
2. Customer ledgers
3. Customer statements
4. Aged accounts receivable trial balance
Accounts payable—
1. Check register
2. Aged accounts payable trial balance
Payroll—
1. Payroll check register
2. Quarterly earnings report
3. Yearly earnings report
4. Payroll tax reports
5. State quarterly report forms
General ledger— (only for selected auditor accounts)
1. Trial balance
2. Adjusting journal entries
3. Reclassification entries
E. Back up VMRF’s data files. All data files should be backed up before running a general ledger “close” feature because once the closing process begins, it generally cannot be stopped. If there is a problem during the running of the close, the backup may be the only way to undo the close.
F. Run Financial Edge general ledger close feature. All transactions, including adjusting journal entries, should be posted before closing the fiscal year because once the year is closed, users cannot access or edit transactions posted to the general ledger for the year. General ledger closing software typically zeroes out income and expense accounts and posts income and expense accounts to retained earning accounts. It also typically resets to zero all vendor, customer, and employee year-to-date totals.
RESPONSIBILITIES:
A. The Audit Committee is responsible for selecting an independent auditor.
B. The Chief Financial Officer, with the assistance of the Sr. Accounting Manager, is responsible for establishing deadlines and coordinating the closing operations of the Foundation.
C. The Accounting, Contracts & Grants, and HR/Payroll Departments are responsible for meeting the deadlines outlined in the Fiscal Year-end Calendar and Closing Task List.
Approved by the VMRF Board of Directors: 5/18/2003