Reviewing Your 2021 Business

Financials to Plan for 2022

By Jason Marvin, CPA | Principal | Boeckermann Grafstrom & Mayer

As we near the end of 2021, proper planning ensures that businesses have timely and accurate year-end financial information, allowing management to make informed and timely decisions after year-end.   It is more important than ever before to make time for proper planning given all the economic, regulatory, and staffing difficulties all industries are facing.  Without timely and accurate financial information, businesses may make the mistake of making decisions that result in difficult cash flow positions, covenant violations, significant tax impacts, and other challenges that could have been avoided.

When performing year-end close, it is important to reconcile each account on the balance sheet and to confirm that the amounts are accurate without any exceptions.  This can be a very time-consuming process. However, some of these procedures can be completed before the end of the year.

The following is a list of some of the most common accounts and what/when to review them.

Cash

• November- Reconcile bank statements
• Review old outstanding checks – write-off or reissue

Accounts Receivable

• Mid-December – Review in detail accounts receivable balances for unusual items
• Mid-December – Analyze accounts for collectability and adjust bad debt reserve

Inventory

• Weekly, Bi-Weekly, Bi-Monthly, Monthly, Quarterly, Annual – Perform counts on inventory comparing financial records vs. actual inventory on hand and adjust inventory to correct amounts; researching large differences
• Mid-December – Dispose obsolete inventory
• Mid-December – Analyze inventory for slow moving inventory and adjusting inventory reserve

Prepaid Expense

• End of November – Update prepaid support

Fixed Assets

• Monthly – Update fixed asset and accumulated depreciation rollforward schedule starting with beginning of year to current period
• Monthly – Updated acquisitions and disposals for depreciation adjustment
• Monthly – Review repair and maintenance expense accounts for items that require capitalization

Accruals

• Monthly – update PTO
• Monthly – update vacation
• Update accrued interest based on the debt rollforward steps below
• Reconcile credit card payables

Debt

• Monthly – Update debt rollforward schedule starting with beginning of year to current period
• Monthly – Tie out debt balances with loan statements (paper or online)

All Accounts

• November – Compare current year to date to prior year to date and investigate unknown variances
• November – Compare current year to date to budget and investigate unknown variances