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The Fiscal Close Toolkit




The Fiscal Close Toolkit

Christine H. Doxey

ISBN: 978-1-119-55449-3 December 2019 400 Pages



This publication focuses on the critical methods that can be used to dramatically improve the fiscal closing process.

The Record to Report (R2R) or Fiscal Closing Process is at the core of the controllership function. The process includes transaction processing, internal and external reporting, and the internal controls—the people, processes, and technology—that constitute the corporate organizational hierarchy. CFOs, controllers, and corporate finance departments require timely, accurate, and consistent data to make appropriate operational and strategic decisions and fulfill statutory, regulatory, and compliance requirements with accurate and timely data. The Fast Close Toolkit offers both strategic and tactical suggestions that can significantly improve the fiscal closing process and provides guidance on new legislation requirements, systems and best practice processes. Checklists, templates, process narratives, and sample policies are provided for every component of the fiscal close.

Investors and shareholders expect fast and easy access to the data created by current business activities in the information-driven digital age. The Fast Close Toolkit provides the necessary tools and expert advice to improve the fiscal closing process. Authoritative and up to date, this book:

  • Identifies the bottlenecks that can impact the and improvethe fiscal close process and provides best practices to help alleviate these challenges
  • Defines the Record to Report (R2R) and recommends the roles and responsibilities for fiscal close processes flow
  • Offers the internal controls to use for the end-to-end fiscal close process
  • Describes approaches for risk management, R2R, and fiscal close benchmarking
  • Identifies KPIs for all aspects of the R2R process
  • Provides the mechanism for developing a financial close scorecard
  • Recommends leading practices for both external and internal reporting
  • Provides guidance on how strategic planning, the budget and forecast processes can be streamlined to enhance the fiscal close and internal reporting results

Written by a respected expert on internal controls and the fiscal closing process, The Fast Close Toolkit is a valuable source of information for professionals involved in controllership and have responsibility for the fiscal close.


Improving the Fiscal Close

Best Practice 1 Consider the Use of a Single ERP System

Best Practice 2 Employ Cloud-Based Computing

Executive Summary

How this Toolkit is Organized

Table of Best Practices

Table of Policies

Table of Checklists

Table of Process Narratives

Table of Standards of Internal Control

Chapter 1 Why the Continued Focus on the Fiscal Closing Process?

 An Overview of the Fiscal Close

Chapter 2 Key Pain Points and Bottlenecks

Chapter 3 The Components of the Fiscal Close

Best Practice 3 Implement Cut-off Dates

Chapter 4 Governing the Fiscal Close Process

Best Practice 4 Implement a Fiscal Close Governance Process

Chapter 5 The Transaction Accumulation, Reconciliation and Sub-Ledger Close

Best Practice 5 Complete General Ledger Reconciliations

Chapter 6 Introduction to the Standards of Internal Control

Best Practice 6 Implement an Internal Controls Program

Chapter 7 Roles and Responsibilities during the Fiscal Close

Chapter 8 The General Ledger and Trial Balance

Chapter 9 The Common Chart of Accounts

Best Practice 7 Implement a Common Chart of Accounts

Chapter 10 Cost Centers

Best Practice 8 Define Business Rules for Establishing Cost Centers

Best Practice 9 Define Allocation Risks

Common Allocation Challenges

Best Practice 10 Implement an Indirect Cost Allocation Methodology

Chapter 11 The Journal Entry Process

Best Practice 11 Streamline Recurring Journal Entries

Chapter 12 Spreadsheet Controls

Best Practice 12 Address Spreadsheet Risks and Implement Controls

Chapter 13 Checklists for the Transaction Accumulation and Sob-Ledger Close

Checklist 1 Transaction Accumulation and Fiscal Close Checklist

Checklist 2 Fiscal Year End Close Sample Schedule

Checklist 3 Accounts Payable Roles and Responsibilities Year End Checklist

Checklist 4 Reconciliation Template

Chapter 14 Sample Policies for the Transaction Accumulation, Reconciliation and Sub-Ledger Close

Policy 1 Account Reconciliation Policy

Policy 2 Accounts Payable Accruals

Policy 3 Spreadsheet Controls

Chapter 15 Process Narratives for the Transaction Accumulation, Reconciliation and Sub-Ledger Close Process

Process Narrative 1 Journal Entry (JE) Process

Process Narrative 2 Management Approval of JEs

Process Narrative 3 Other Current and Long Term Assets

Process Narrative 4 Other Current and Long Term Liabilities

Chapter 16 Standards of Internal Control for the Transaction, Accumulation, Reconciliation and Sub-Ledger Close Process

Standards of Internal Control 1 Journal Entry (JE) Process

Standards of Internal Control 2 Approval of Journal Entries

Standards of Internal Control 3 Other Current and Long Term Assets

Standards of Internal Control 4 Other Current and Long Term Liabilities

Chapter 17 Corporate Close and Consolidation

Differences between IFRS and U.S. GAAP That Impact the R2R Process

How Often are New IFRS Pronouncements Issued?

Is IFRS, as Issued by the IASB, the Same for all Companies and Industries, in all Countries

What is the Principal Standard Governing Conversion to IFRS?

Does IFRS Use the Same Financial Statements as those Required under U.S. GAAP?

How will IFRS Impact Internal Control Reporting and Certification under the Sarbanes Oxley Act of2002?

Chapter 18 The Number of Consolidation Points

Best Practice 13 Automate the Consolidation Process

Best Practice 14 Include the People that Impact the Close

Best Practice 15 Create Consistent Closing Schedules

Best Practice 16 Consider Fiscal Close Process Improvements

Chapter 19 The Number of Closing Cycles

Best Practice 17 Reduce the Number of Closing Cycles

Chapter 20 Post-Closing Entries

Best Practice 18 Develop Business Rules for Post-Closing Entries

Chapter 21 Communication and Accountability

Chapter 22 Financial Statement Assertions

Financial Statement Assertion Requirements and Application

Chapter 23 Checklists for the Corporate Close and Consolidation Process

Checklist 5 Corporate Close and Consolidation

Checklist 6 Executive Level Closing Checklist

Checklist 7 Twenty Critical Areas to Review at Year-End

Checklist 8 The Year-End Financial Statement Checklist

Checklist 9 The Year-End Transaction Checklist

Checklist 10 The Year-End Payroll Process Checklist

Chapter 24 Sample Policies for the Corporate Close and Consolidation Process

Policy 4 Fiscal Close and Consolidation Process

Chapter 25 Process Narratives for the Corporate Close and Consolidation Process

Process Narrative 5 Balance Sheet Consolidation

Process Narrative 6 Assets Held for Sale Due to Discontinued Operations

Chapter 26 Standards of Internal Control for the Corporate Close and Consolidation Process

Standards of Internal Control 5 Balance sheet Consolidation

Standards of Internal Control 6 Assets Held for Sale Due to Discontinued Operations

Chapter 27 Analysis and Reporting (The Final Mile)

Chapter 28 Internal Reporting and External Reporting

Best Practice 19 Ask Key Questions to Define Your Internal Financial Reporting Process

Chapter 29 Budgeting and Forecasting

Best Practice 20 Consider Five Steps for a Successful Budget Process

Chapter 30 Reduce Fiscal Close Cycle Times by Moving Your Finance Function to “Dynamic” Budgeting and Planning

Chapter 31 Fixed Assets and the Capital Budget

Best Practice 21 Establish a Capital Budget Process

Developing the Capital Budget

Best Practice 22 The Capital Review and Approval Board (CARB) Process

Construction in Process Accounting

Fixed Asset Management

Depreciation Methods

Intangible Assets

Asset Appreciation and Asset Impairment

Disposal of Fixed Assets

The Capital Budget and Fixed Assets Business Process Risks and Challenges

Chapter 32 The Forecast Process

About the Forecast Process

The Forecasting Process for Small Businesses

Forecasting Tools

Chapter 33 The Fiscal Close and Strategic Planning

Best Practice 23 Include Finance and Accounting in the Strategic Planning Process

Best Practice 24 Use a Strategic Planning Readiness Checklist

Best Practice 25 -Follow These Seven Steps for Your Strategic Planning Process

Best Practice 26 Implement Six Key Elements for your Strategic Plan

Best Practice 27 Use a Standardized Table of Contents for Your Strategic Plan

Strategic Planning Methodologies

Best Practice 28 Establish Performance Metrics to Determine the Effectiveness of Your Strategic Plan

Chapter 34 Analytics to Detect Financial Statement Fraud

Best Practice 29 Use Red Flags to Detect Financial Statement Fraud

The National Commission on Fraudulent Financial Reporting (The Tread way Commission)

Chapter 35 Checklists for the Analysis and Reporting Process

Checklist 11 Quarter End Fiscal Close (10Q)

Checklist 12 Year End Fiscal Close (10K)

Checklist 13 -Performing Financial Statement Analysis

Checklist 14 Trend Analysis

Chapter 36 Sample Policies for the Analysis and Reporting Process

Policy 5 Basic Policies on Financial Reporting

Chapter 37 Process Narratives for the Analysis and Reporting Process

Process Narrative 7 Disclosure Checklist

Process Narrative 8 Fluctuation Analysis

Process Narrative 9 Cash Flow Statement Reconciliation

Process Narrative 10 -Reporting Debt

Chapter 38 Standards of Internal Control for the Analysis and Reporting Process

Standards of Internal Control 7 -Disclosure Checklist

Standards of Internal Control 8 Fluctuation Analysis

Standards of Internal Control 9 Cash Flow Statement Reconciliation

Standards of Internal Control 10 Reporting Debt

Chapter 39 The Virtual Close Myth or Reality?

What is the Virtual Close?

How is the Virtual Close Different from the Soft close?

Case Study: The Virtual Close at Cisco

More than Technology

Implementing a Virtual Close

Four Implementation Guidelines

Eight Implementation Advisories

Chapter 40 Roadmap:Benefits of the Fast Close

Chapter 41 Accelerating the Close with Automation

Addendum:Fast Close Tools and Additional Best Practices

1. Contingency Planning

Developing an Developing the IT Business Continuity Plan

Roles and Responsibilities

Oversight & Governance

Business Resiliency

Disaster Recovery

Disaster Recovery and Cloud Providers

2. Roadmap 25 Steps to Shorten the Fiscal Close

Best Practice 30–Establish Escalation Procedures:

3. The Monthly Financial Close Process Checklist

4. Foreign Corrupt Practices Act (FCPA)

5. Accelerate Your Financial Close -A 35 Step Roadmap

6. The Fast Close Compliance Toolkit

7. The M&A Due Diligence Checklist

8. Finance and Accounting Key Business Partnership Matrix

9. Fiscal Close Risks and Challenges

10. Fiscal Close Standards of Internal Control

11. The Fiscal Close Dashboard

12. The Controller’s Dashboard

13. The Detailed Fiscal Close Scorecard

14. The Project Management Toolkit