By: Sylvester Ofori
Industry-aligned guide for general services, manufacturing, construction, banking, NGOs, and fintech
Retiring the “January Panic”
Each December, many organisations make the same commitment: “This year, we will close properly.” Yet January often arrives with predictable urgency. Management needs year-end numbers, statutory schedules must be finalised, and auditors begin asking questions that expose gaps in month-end discipline:
- Where are the bank reconciliations?
- Why are legacy receivables still outstanding?
- What sits inside “Other Expenses”?
- What evidence supports payment approvals?
The result is an all-too-common scenario: finance teams rushing to close the books, compile tax schedules, respond to audit requests, and satisfy management queries simultaneously—and under pressure.
The central point is straightforward: year-end close is not a one-off event; it is the culmination of the organisation’s monthly financial discipline. Where month-end routines are weak, year-end becomes reactive and error-prone. Where month-end routines are strong, year-end becomes a structured confirmation exercise.
This article presents a practical ten-step year-end close sequence tailored to the Ghanaian operating environment and adaptable across industries. The approach recognises that the close process must be aligned to the nature of the entity: what works for a general services business will not necessarily work for a construction contractor, regulated financial institution, nonprofit organisation, or fintech.
As with operational risk management, sequencing matters: focus first on the fundamentals that drive overall reliability (cash, cut-off, reconciliations), and only then proceed to refinement and presentation. In simple terms, you do not start polishing the living room while the kitchen is on fire.
The 10-Step Year-End Close Checklist
Step 1 — Establish the Close Calendar and Lock the Reporting Period
Objective: Prevent backdating, late postings, and uncontrolled adjustments that compromise reporting integrity.
A disciplined close begins with clear governance over timing and responsibility. Management should formally communicate the close timetable and enforce a defined cut-off for posting transactions. For example, organisations may require that all December transactions be recorded by a specified date in early January, with any subsequent entries permitted only through a controlled approval process (e.g., CFO authorisation). The reporting period should then be locked in the accounting system to prevent unauthorised changes; where system controls are limited, equivalent manual controls must be applied. Finally, responsibility for key close areas should be assigned explicitly, typically covering cash and bank, receivables, payables, payroll, inventory, tax, and fixed assets.
This step strengthens the reliability of the financial statements by supporting consistency and comparability in presentation and reducing the risk of misstatement. It also aligns with the audit expectation that management maintains a controlled financial reporting process; in practice, an undisciplined “open posting” environment is a common source of avoidable audit adjustments.
If your staff can post entries into last year “because the system allows it,” that is not flexibility. That is financial anarchy with Wi-Fi.
Step 2 — Reconcile Cash and Bank: Your First Non-Negotiable
Objective: Establish the reliability of your financial records by confirming cash. If cash is misstated, every downstream balance is at risk.
Begin the close by reconciling all cash-equivalent balances: bank accounts (local and foreign currency), mobile money wallets, and petty cash, supported by a year-end physical cash count where applicable. The process should start with obtaining original bank statements and reconciling them to the general ledger. Long-outstanding reconciling items (unpresented cheques, unmatched deposits, uncleared transfers) must be investigated and resolved, rather than rolled forward indefinitely. Management should also ensure completeness by posting missing items such as bank charges, interest, withholding tax impacts, and foreign exchange revaluations for foreign currency balances.
This step is anchored in audit-quality evidence: bank statements and reconciliation schedules are typically high-reliability audit inputs under the principles of audit evidence, and foreign currency balances require appropriate year-end remeasurement in line with foreign exchange requirements. Common audit adjustments in this area include duplicated transfers, unrecorded bank charges, unreconciled mobile money balances, and “suspense” accounts that persist across multiple periods without clear resolution.
Industry emphasis varies. Fintech and regulated financial institutions should treat reconciliation as a core operational control, extending beyond bank balances to include float, settlement, escrow/trust accounts, chargebacks, and merchant settlement cycles. NGOs should reconcile by donor and currency, preserving traceability between restricted funds and bank activity. Construction businesses should apply the same discipline to project bank accounts and site cash advances, ensuring usage is supported by approvals and documentation.
Step 3 — Close Receivables: Confirm Collectability, Not Invoicing
Objective: Ensure reported revenue is supported by realisable receivables. Profit is only credible when it is collectible, or demonstrably likely to be.
Close receivables by generating an aged receivables report and investigating legacy balances. Resolve disputes, correct misapplied receipts, eliminate duplicate invoices, and validate that recorded sales are supported by delivery or service completion evidence. Where collectability is uncertain, management should recognise an allowance for doubtful debts based on a reasoned estimate of expected losses. From a standards perspective, receivables typically require an expected credit loss mindset, particularly where balances are significant, and auditors treat bad debt allowances as estimates requiring disciplined support and documentation.
Audit adjustments frequently arise where sales are recorded without delivery evidence, receipts remain unapplied, or long-aged balances are carried forward indefinitely without a credible recovery plan. Sector-specific risks are well established: construction entities must classify and support retentions, claims, and variations properly; manufacturers should pay close attention to export receivables, foreign exchange settlement, and shipping cut-off; NGOs should recognise donor receivables only when conditions are met; and fintechs must manage settlement receivables, partner balances, reversals, and chargebacks with precision.
Step 4 — Close Payables: Capture What You Owe, Not Only What Is Invoiced
Objective: Prevent overstated profits by ensuring liabilities are complete, timely, and supported.
Payables should be closed by reconciling major supplier statements to ledger balances and performing a structured search for unrecorded liabilities. A practical approach is to review post-year-end payments and trace them back to goods and services received before year-end, then record appropriate accruals for expenses such as utilities, rent, professional fees, security, and telecommunications. This aligns with accrual accounting principles under IFRS, including the recognition of present obligations where applicable, and is typically supported through invoices, contracts, goods received notes (GRNs), supplier statements, and other primary evidence.
Common audit adjustments include GRN-not-invoiced items, missing subcontractor claims, incomplete statutory accruals, and unsupported “round-number” accruals that reflect approximation rather than analysis. Manufacturers should focus on GRN/invoice matching and cut-off discipline. Construction entities should strengthen controls over subcontractor claims and site-related obligations. Fintechs should ensure completeness of annual vendor obligations, particularly cloud services, compliance tools, and KYC/AML providers that often span periods.
Step 5 — Close Payroll and Statutory Balances: PAYE, SSNIT, Withholding
Objective: Secure compliance and financial integrity over the organisation’s largest recurring cost and one of its highest regulatory exposures.
Close payroll by reconciling the payroll register to the general ledger and to bank payments, ensuring that all payroll-related journals and payments are complete and correctly classified. Confirm staff loans and advances, and reconcile statutory liabilities—PAYE, SSNIT, and withholding tax—back to filed returns and payment receipts. From an audit perspective, payroll controls are routinely treated as a key risk area because payroll touches cash, compliance, and potential fraud exposure; professional ethics and integrity are also critical, given the reputational consequences of payroll manipulation.
Industry considerations matter. Construction businesses should maintain robust payroll registers for casual labour and site-based staff, supported by approvals and attendance records. NGOs should ensure allowances and per diems follow documented policy and consistent treatment. Banking and fintech organisations should apply heightened discipline around bonuses, commissions, and incentive-based pay, ensuring calculations are transparent and properly approved.
Step 6 — Inventory: Count, Value, and Cut Off Correctly
Objective: Ensure gross profit is not driven by inaccurate stock figures. Where inventory is material, inventory quality equals profit quality.
Inventory close should begin with a supervised physical count supported by signed count sheets, clear counting instructions, and movement controls. Cut-off must be applied consistently to goods received, goods dispatched, and goods in transit to prevent timing distortions. Inventory valuation should follow the appropriate cost formula (e.g., FIFO or weighted average) and include consideration of obsolescence and net realisable value where required. From a standards standpoint, inventory accounting is anchored in the relevant inventory requirements, and physical counts and supporting schedules are among the most persuasive forms of audit evidence.
Manufacturers should extend procedures across raw materials, work-in-progress, and finished goods, including yield and scrap considerations. Construction entities should count and track materials at site with a stores ledger and usage evidence. Service businesses, NGOs, and many fintechs may have limited inventory, but should apply similar discipline to prepayments, consumables, and accrual-based items.
Step 7 — Fixed Assets and Capex: Verify Existence, Classification, and Depreciation
Objective: Ensure capital expenditure is appropriately supported and consistently treated—preventing misclassification and unsupported asset balances.
Close fixed assets by updating the fixed asset register for additions, disposals, transfers, locations, and serial numbers. Apply a clear capitalisation policy to distinguish capital items from repairs and maintenance, and calculate depreciation consistently in line with policy and useful lives. Where leases are significant, confirm lease treatment and disclosures. Auditors often focus on this area because errors frequently arise from unsupported capitalisation, inconsistent depreciation, or incomplete registers.
Construction businesses should place particular emphasis on equipment tracking and disposal documentation. Manufacturers should ensure commissioning and installation costs are properly supported and that capitalisation points are clear. Fintechs should distinguish between subscription-based software (typically expensed) and qualifying capitalised development costs where policy and criteria are satisfied.
Step 8 — Debt, Interest, and Financing: Reconcile Balances and Covenant Exposure
Objective: Present financing accurately and ensure year-end interest and foreign exchange impacts are complete and supported.
Prepare a debt rollforward that reconciles opening balances, drawdowns, interest accruals, repayments, fees, and closing balances. Accrue interest at year-end and assess covenant compliance where applicable (e.g., DSCR, leverage, liquidity thresholds). Support should include loan agreements, lender statements, amortisation schedules, and foreign exchange computations for FX-denominated facilities.
Construction entities should reconcile overdrafts and equipment loans rigorously. NGOs should distinguish donor advances and deferred income from debt, while ensuring liabilities are correctly classified and supported. Fintechs should pay close attention to investor instruments and classification/disclosure, which may require careful evaluation.
Step 9 — Revenue Recognition and Cut-Off: Record Income When Earned
Objective: Ensure revenue is supported by performance, not ambition. Revenue is routinely a high-risk area because it is susceptible to pressure and timing errors.
Define revenue recognition rules by revenue stream—goods delivered, services rendered, milestones achieved, or subscription periods elapsed—and apply these rules consistently. Identify advance payments and record deferred revenue where performance obligations remain outstanding. Perform focused cut-off tests around year-end for both revenue and related costs to prevent timing distortions.
Construction entities must apply disciplined methodologies for revenue recognised over time, supported by certifications, progress evidence, variations, and claims documentation. Banks must ensure interest income recognition aligns with impairment considerations. Fintechs should assess principal-versus-agent presentation, as this can significantly affect revenue reporting. NGOs should recognise grant income based on restrictions and conditions, ensuring cash receipts are not automatically treated as income.
Step 10 — Taxes, Close Pack, and Sign-Off: Finish Audit-Ready
Objective: Deliver an audit-ready close pack that is internally reviewed, supported, and defensible.
Reconcile tax control accounts—VAT, withholding tax, PAYE, and corporate income tax accruals—by tying ledger balances to filings and payment receipts. Compile a comprehensive close pack including the final trial balance, all reconciliations and lead schedules, major supporting schedules (AR/AP, payroll, fixed assets, debt), variance explanations for material movements, and a management sign-off memo that confirms completeness and accountability.
A disciplined close pack reduces audit disruption, improves management reporting, and strengthens the credibility of the financial statements, because it presents not only numbers, but the evidence and governance behind them.
Standards Anchor
- IAS 12 (income taxes) and IAS 10 (events after reporting date).
- ISA 520: auditors will ask about unusual fluctuations—prepare explanations in advance.
Best Practice: The “Audit Adjustment Prevention System”
Most audit adjustments are not “big fraud.” They are predictable housekeeping failures. Here are the top preventers:
- Monthly bank reconciliations completed and reviewed
- Aged receivables review with collection actions and allowance logic
- Supplier statement reconciliations for major vendors
- Payroll reconciliations and statutory compliance file
- Stock count discipline with cut-off controls (where applicable)
- Fixed asset register discipline with capitalisation policy
- Documented revenue recognition rules by revenue stream
- A standard evidence folder structure everyone uses
- A close checklist signed by preparer and reviewer
- Management review that asks: “Does this make business sense?”
Your Simple Year-End Evidence Folder Structure
Use this structure every year (OneDrive/Google Drive/SharePoint). Do not complicate it.
00 Admin
- Close calendar, responsibilities, approvals
- Organisation chart, key contacts
01 Bank and Cash
- Bank statements, reconciliations, mobile money, petty cash counts
02 Receivables
- Aging, confirmations, contracts, credit notes
03 Payables and Accruals
- Aging, supplier statements, accrual schedules, GRN-not-invoiced
04 Payroll and Statutory
- Payroll registers, PAYE/SSNIT/WHT filings and receipts, staff advances
05 Inventory
- Stock count sheets, valuation workbook, obsolescence approvals
06 Fixed Assets
- FAR, additions/disposals support, depreciation schedule, leases
07 Debt and Financing
- Loan agreements, schedules, statements, covenant calculations
08 Taxes
- VAT/WHT/PAYE workings, corporate tax draft, tax correspondence
09 Management Review
- Variance explanations, final TB, draft financials, adjustment log
If your year-end close depends on miracles, your audit will depend on mercy. Let’s not do that.
Author: Sylvester Ofori is a Chartered Accountant and Manager in Financial Assurance and Advisory, with experience spanning audit, forensic accounting, financial reporting, and advisory services across multiple sectors. He currently serves as a Subject Matter Expert on an accounting software solution, providing technical guidance on the development and application of standards-compliant financial systems.
His professional interests lie at the intersection of accounting, technology, and governance, with a strong focus on practical implementation of international financial reporting standards. Through his writing, Sylvester shares insights aimed at strengthening financial integrity, enhancing decision-making, and supporting sustainable organisational growth.