The end of the financial year is a critical period for Australian businesses. A thorough year-end financial close ensures that records are accurate, compliance requirements are met, and the business is well-positioned for the year ahead. Overlooking important tasks can lead to errors in tax reporting, mismanaged cash flow, and missed opportunities for strategic planning.

This article provides a comprehensive checklist for Australian business owners and finance teams to ensure nothing is overlooked during the year-end financial close.

Reconcile Bank Accounts

Bank reconciliation is the foundation of an accurate year-end close. Compare your internal records with your bank statements to identify discrepancies, unrecorded transactions, or bank fees. For businesses dealing with multiple accounts or foreign currencies, it is important to reconcile each account individually.

Tips:

1. Ensure all deposits, withdrawals, and bank charges are recorded.
2. Investigate any uncleared or unmatched transactions.

Use accounting software like Xero, MYOB, or QuickBooks to automate reconciliation and reduce errors.

Review Accounts Receivable and Payable

Ensuring that all customer invoices and supplier bills are accounted for is essential for accurate financial reporting.

1.    Accounts Receivable:

• Identify outstanding invoices and follow up on overdue payments.
• Record any doubtful debts or write-offs if necessary.

2.    Accounts Payable:

• Confirm that all supplier invoices for the year have been entered.
• Schedule payments for outstanding bills before the year closes.

Verify Inventory Levels

For businesses holding stock, inventory valuation impacts both the balance sheet and cost of goods sold. Conduct a physical stocktake to reconcile actual inventory with accounting records.

Tips:

1. Adjust for damaged, obsolete, or missing stock.
2. Ensure inventory valuation methods (FIFO, weighted average, or specific identification) are applied consistently.

Record any adjustments in your accounting system to reflect accurate values.

Review Fixed Assets and Depreciation

Fixed assets such as equipment, vehicles, and property must be accounted for correctly.

Steps:

1. Verify the purchase, sale, or disposal of assets during the year.
2. Calculate and record depreciation according to accounting standards.
3. Update asset registers to reflect accurate values.

Reconcile Payroll and Superannuation Obligations

Payroll reconciliation ensures that employee payments and entitlements are correctly recorded.

Checklist:

1. Reconcile PAYG withholding, superannuation contributions, and leave balances.
2. Ensure all employee benefits, bonuses, and deductions are accurately accounted for.
3. Confirm that payroll reports match your accounting records.

Review Loans, Liabilities, and Provisions

Ensure that all financial obligations are properly recorded:

1. Reconcile loans, interest, and repayments.
2. Review outstanding liabilities and provisions for accuracy.
3. Adjust for any accrued expenses or unrecorded obligations.

Prepare Financial Reports

Once reconciliations are complete, prepare comprehensive financial statements:

1. Profit and loss statement
2. Balance sheet
3. Cash flow statement

These reports provide insights into business performance, support strategic planning, and ensure compliance with the Australian Taxation Office (ATO).

Conduct a Final Review

Before closing the books, review all reconciliations, adjustments, and reports:

1. Check for errors or omissions.
2. Ensure all year-end journals are posted.

Confirm that tax obligations, including GST and PAYG, are accurately reported.

Conclusion

A systematic approach to year-end financial close reduces errors, ensures compliance, and provides a clear picture of your business’s financial health. Implementing these best practices not only simplifies year-end procedures but also lays a solid foundation for strategic decision-making in the coming year.