Focus.com Publication on YE Financials

1. 5 Best Practices for Preparing
Year-end Financial Statements
December 27, 2010
topics: best practices expert content finance business finance financial statements
Focus Research ©2010 All Rights Reserved

2. 5 Best Practices for
Preparing Year-end Financial Statements
5 Best Practices for Preparing Year-end Financial Statements
December 27, 2010
by John James, Rick Kadet, Bill Kennedy, Robert A. Marchello, Peter Welch
topics: best practices expert content finance business finance financial statements
Executive Summary
Your life and the lives of your accounting staff get busy and difficult during the month-ends. It gets even
worse during the end of the financial year. How can you avoid the stress of preparing accurate year-end
financial statements? In this guide, Focus Experts John James, Rick Kadet, Bill Kennedy, Robert A. Marchello,
and Peter Welch share their top 5 best practices for preparing year-end financial statements that add up.
After reading this guide, be sure to check out the entire discussion and join the conversation:
http://www.focus.com/questions/finance/preparing-end-year-financial-statements-best-practices/.
Best Practices Checklist
1. Put a plan in place at the beginning of the financial year.
2. Understand that process is more significant than the time of year.
3. Document processes and communicate responsibilities and deadlines.
4. Prioritize resources by taking a top-down risk assessment (TDRA) approach.
5. Consider the audience for your statements.
5 Best Practices for Preparing Year-end Financial Statements Focus Research ©2010 2

3. 5 Best Practices for
Preparing Year-end Financial Statements
Best Practices
1. Put a plan in place at the beginning of the financial year.
“Preparing end-of-year financial statements should be addressed at the beginning of the financial year, not at
the end. It is a major project, whose payoff will be a substantial reduction in costs and a huge improvement in
quality and efficiency of developing financial statements.” (Welch)
“Take a project management approach to constructing year-end financial statements. Develop a project plan
and assign resources, time allocations and critical success points. There should be a separate project time line
for the closing process that will lead up to the drafting of the financials.” (Marchello)
“Even if this year is a mad scramble to get the statements done and issued in time, plant the seeds for
next year.” (Kennedy)
2. Understand that process is more significant than the time of year.
“Often preparing the year-end financial statements is treated as though it is a one-time event, rather than a
repeating process. Move as many processes away from the year end as possible. Rather than posting things
to suspense accounts and leaving it to year-end to deal with them, do the full job at the time. For example,
calculate the gain/loss on the sale of assets at the time of the sale, rather than at year-end. Adjust your
depreciation calculations as you go. Check and clear amounts accrued at the last year-end in the first month,
not the 12th.” (Kennedy)
“Although Cisco may have pioneered the ‘perpetual close,’ current technology allows for something
approaching it without the need for huge expenses in software. End-of-year is not, in itself, significant.
It only represents the end of a predetermined accounting period. End-of-year is less significant than
process.” (James)
3. Document processes and communicate responsibilities and deadlines.
“Have your year-end processes documented and prepare checklists to ensure that every step is done and
checked. Make sure everyone is aware of their tasks and deadlines. Check to see if there are any new
requirements for this year-end and build them into your plan.” (Kennedy)
4. Prioritize resources by taking a top-down risk assessment (TDRA) approach.
“Only items of a material magnitude that could distort the faithful representation of a company’s financials
should be viewed critically and aggressively to verify accuracy. Assign a qualified accountant to systematically
monitor and control that each subaccount is correctly being charged that for which it was set up. Any observed
errors should result in immediate remedial and corrective action. All other numerical data, immaterial amounts
and voluminous, should only be given periodic review and certainly not at year-end.” (Welch)
5 Best Practices for Preparing Year-end Financial Statements Focus Research ©2010 3

4. 5. Consider the audience for your statements.
“Consider the audience for your statements, which can be auditors; controlling owners and other
shareholders; lending institutions; investment bankers; the board of directors; vendors and customers. It
makes sense well before year-end to consider the audience and tailor the statements to meet the needs of
each constituency.” (Kadet)
Read the entire discussion, and join the conversation:
http://www.focus.com/questions/finance/preparing-end-year-financial-statements-best-practices/
5 Best Practices for Preparing Year-end Financial Statements Focus Research ©2010 4

5. Contributing Experts
John James
CEO, JD James & Co.
www.focus.com/profiles/john-james-1/public/
Rick Kadet
Vice President, Senior CFO Consultant, The Brenner Group, Inc.
www.focus.com/profiles/rick-kadet/public/
Bill Kennedy
Chief Financial Officer, The United Church of Canada
www.focus.com/profiles/bill-kennedy/public/
Robert A. Marchello
CEO and Managing Member, Marchello Consulting Group, LLC
www.focus.com/profiles/robert-a-marchello/public/
Peter Welch
President, Sox International Inc.
www.focus.com/profiles/peter-welch/public/
About this Report
Focus Best Practices Reports are designed to help professionals understand business and technology best practices
in particular topic areas. The best practices included in each report are sourced from Focus Experts who have exhibited
expertise in the particular topic. Best Practices Reports are designed to be practical, easy to consume, and actionable.
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