Year-End Close

Year-end close is the most demanding close of the year. Besides normal month-end tasks, it involves extra work that is often done only annually.

This can include physical stock counts, reviewing assets for impairment, updating provisions and estimates, calculating the annual tax provision, finalising bonuses and accruals, confirming balances with banks and customers, preparing the full financial statements with notes, and providing information to external auditors.

For example, a retailer closing its financial year on 31 January might count all inventory in its stores and warehouses, compare the counts with its records, and write off any missing or damaged stock before finalising its accounts.

Once the year is closed and audited, the accounts are usually locked so that no further changes can be made to that year, and income and expense balances are transferred into retained earnings. Planning the year-end close well in advance helps companies meet deadlines for filing and publishing their annual reports.