Page 248 - Accounting Best Practices

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12–12 Assign Closing Responsibilities
that anything over a specific dollar variance is always reviewed, plus any large
percentage variances that may fall under the preset dollar level, with the excep-
tion of certain accounts reviewed in other ways. This system can then be modified
over time to allow for changes in the controller’s comfort level with variance
investigation, as well as to cover new accounts that may be added. By creating
such a system of variance review levels, it is possible to greatly reduce the amount
of review work that must be completed prior to issuing financial statements.
Cost: Installation time:

12–12 ASSIGN CLOSING RESPONSIBILITIES

The typical financial statement preparation process can be a jumbled affair. It is
not clear who is completing which task or when anything needs to be completed.
This leads to disarray in the ranks of the accounting staff whenever the financial
statements are to be produced.
A simple best practice is to produce a document that clearly states exactly
who is responsible for each task required to produce financial statements. As
noted in Exhibit 12.2, it states the job position that must complete each task. In
order to fully utilize this document, it is necessary to have a staff meeting prior to
each closing period so the controller can go over the closing responsibilities. This
reinforces the need for each person to complete each task exactly on time, so the
accounting team can reliably issue financial statements every period. When com-
bined with a detailed closing schedule, as described later in this chapter under the

Exhibit 12.2 Statement of Responsibilities for the Production of Financials

General
Assistant Ledger
Task Controller Controller Accountant

Calculate Depreciation ✓
Calculate Interest Accrual ✓
Compare to A/P Detail ✓
Compare to A/R Detail ✓
Compare to F/A Detail ✓
Do Recurring Journal Entries ✓
Prepare Bank Reconciliation ✓
Prepare Footnotes ✓
Review Cutoff ✓