Spring Cleaning Time: Close Checklists

Shortening your close checklist can also help shorten your month-end close.

Many of us are about to start our first quarterly closes of the new fiscal year. Before the fun starts next week, consider taking some time to clean-up your accounting close checklist. Below are a couple good reasons for going through this exercise:

1. From a psychological standpoint, a checklist with too many tasks is mentally daunting. If someone sees a massive task list in front of them, its human nature to immediately worry or feel overwhelmed.
2. If you have daily or periodic meetings where you check-off items from your month-end checklist, reducing the number of tasks will obviously reduce the time it takes to get through your meeting.
3. If the completion of your checklist is a SOX key control, limiting your checklist to just critical close tasks reduces the chance of failing that control. For example, if you forget to perform an inconsequential close task that is in your close checklist - that control may potentially fail since that item/task is in your checklist.

How do you go about trimming your close checklist? Below are some suggestions!

• This is stating the obvious, but almost every close checklist I've seen still has a good amount of this: If there are non-relevant close items in your checklist, move them to a separate checklist! For example, important tasks such as "Run Depreciation" and "Record Stock Comp Expense Entry" should be in your official close checklist. On the other hand, internal tasks that don't impact financials such as "Send Meals & Entertainment Expense Report to Marketing" should be separated/moved to a different non-close checklist.
• Remove tasks that are reminders to complete other tasks that are already on the checklist. For example, sometimes I'll see "Send Vendor Confirmation Reminder" when there is already a task called "Book Vendor Confirmation Accrual". Each task owner should be individually responsible for their own followups, and no one else should have to see these types of reminders on the close checklist. PS: Gappify's vendor confirmation accrual solution automates these vendor reminders :)
• Revenue Team: We all get that you have many high-visibility/sensitivity tasks. But not all detailed tasks you perform must be included on the overall accounting close checklist! Yes, we need to include tasks such as critical revenue/deferred revenue reclasses. But do we really need to see "Monthly Meeting with GM of (X)" if that meeting doesn't have any financial statement implications?
• If your standard payroll-run JE consistently includes the same items on every JE (e.g., payroll taxes, FSA, commuter benefits, etc.) - there is no need to list each expense as its own line on your month-end checklist. If the JE all gets posted at the same time, tracking the status of each expense type has no value.
• Lastly, detailed recon checklists have no place in your close checklist! At most, perhaps one item called "Recons Completed" would be appropriate. Most auditors require a separate "recon checklist" as part of the recon key control anyway, so combining this recon checklist with your accounting close checklist is just unnecessary.