As the end of the financial year rolls around, it’s super important to make sure your business’s financial records are spot on. This is where your accountant steps in, performing a bunch of key checks to wrap up your accounts.
These checks help prepare accurate financial statements and ensure your business stays compliant with the rules and ready for the next year. Let’s break down the key checks your accountant should be making at year-end, so you can relax knowing your finances are in good shape.
Bank reconciliation
Bank reconciliation is all about making sure the transactions in your bank account match the ones in your financial records. Think of it as double-checking to ensure everything lines up.
By comparing your bank statement with your records, you can spot any discrepancies, errors, or missing transactions. This keeps your financial reporting accurate, helps detect potential fraud, and ensures your financial statements are reliable for making smart money decisions.
Review accounts receivable and payable
Reviewing accounts receivable and payable means checking the money owed to your business (accounts receivable) and the money your business owes to others (accounts payable).
If you have outstanding invoices at year-end (aged receivables), they might need to be written off as bad debt. Bad debt is money that a business is owed but is unlikely to collect. This usually happens when a customer doesn’t pay their invoices despite repeated attempts. Bad debts are written off as an expense in your financial records.
Not sure how to handle bad debts? The DNA team can help—just drop us a message or give us a call.
Expense and revenue review
Making sure all expenses and revenues for the year are recorded means going over every financial transaction to ensure nothing is missed. Accountants look for any transactions that seem unusual or need more info.
They check that each transaction is categorised correctly in the chart of accounts. For example, expenses like rent or wages go into specific categories, while income from sales or services is put into the right revenue streams.
HMRC liabilities reconciliation
HMRC liability reviews are crucial. They involve checking tax liabilities (like VAT, PAYE, and corporation tax) in your financial records against HMRC’s records to ensure they match accurately.
Stock count
Inventory or stock count means physically counting and recording all the goods and materials your business holds at a specific time. This includes items for sale, raw materials for production, and finished goods ready for distribution.
The goal is to make sure recorded inventory levels match the actual physical quantities. Inventory counts are usually done annually or quarterly, depending on your business’s needs.
Fixed assets check
A fixed asset check involves verifying and documenting all tangible assets your business owns, like equipment, vehicles, and machinery. This ensures that the recorded values and details of fixed assets in your financial records are accurate.
Setting up Fixed Asset Registers (FAR) in Xero involves entering each asset with details like purchase date, cost, depreciation method, and useful life. This helps track depreciation expenses accurately to comply with accounting standards.
Accruals and Prepayments
Accruals and prepayments are accounting adjustments made at the end of a reporting period to ensure expenses and revenues are recognised in the correct period, regardless of when cash transactions occur.
Accruals involve recognising revenue or expenses that have been earned or incurred but haven’t been recorded yet. For example, if you provide services in December but haven’t been paid yet, you record the revenue as accrued income.
Prepayments occur when you pay for goods or services in advance but haven’t used them yet. For instance, paying rent for the next quarter in advance results in prepaid expenses, which are recorded and then expensed over the periods they relate to.
Loans and credit card reconciliation
For loans, reconciliation involves comparing the principal and interest payments recorded in your accounting system with loan statements from the lender. This ensures all payments are accurately accounted for and any discrepancies are fixed. It also includes verifying the remaining loan balances to match the lender’s records.
Credit card reconciliation means matching the transactions recorded in your accounting system with monthly credit card statements from the issuer.
This ensures all purchases, payments, fees, and interest charges are correctly recorded and the ending balance on the credit card statement matches your financial records.
Financial statement preparation
By ensuring all financial records are reconciled and accurate, your accountant can confidently determine the correct amount of taxes owed and prepare the necessary provisions to comply with HMRC regulations.
Financial statement preparation involves compiling and presenting your business’s financial performance and position for a specific period (usually a year). It includes creating two main statements: the profit and loss (revenues and expenses) and the balance sheet (assets, liabilities, and equity).
In summary
Getting your financial statements right gives you a clear, honest picture of how your business is doing financially. These statements show where your money comes from and where it goes. By accurately crunching these numbers and following the rules, you’re not just meeting requirements; you’re showing everyone—from shareholders to your team—that you’re managing your business well.
Our team at DNA Accountants is here to help. With expertise in financial reporting and compliance, we’ll ensure your financial statements are accurate and transparent. Whether you need help with year-end accounts, tax provisions, or cash flow management, we’ve got you covered.
Contact us today to drive your business forward with confidence.
