EOY Financial Statements

Common Mistakes on EOY Financial Statements

A2014-10-03O-Nas if the beginning of the new year—with all its accruals, deferred assets, and budget comparisons—wasn’t a big enough bugger, those in charge of end-of- year financial statements have one more obstacle in their year-end reporting: examining the financial reports for accuracy.

Thoroughly reviewing end-of-year reports to ensure accuracy and accountability is vital. With so many items and numbers to look at, that can be an overwhelming task, so we’ve compiled a list of the most common mistakes found on financial statements.

Common Mistakes on End-of-Year Financial Statements and Reports

Overlooking Expense Line Items. Even large expenditures can sometimes be overlooked. These expenses can include everything from salaries and benefits, costs to provide services, to office supplies and other operating expenses. A quick once-over and comparison to estimated expenses on the budget can help guarantee that an expense has not been mis-categorized. The same rings true for assets and income.

Classification of Assets and Liabilities. Since assets and liabilities fall into different categories, misclassification of these can severely alter the financial picture. There are current liabilities, long-term liabilities, current assets, and long-term assets. It’s fairly easy to accidentally record, for example, a long-term liability into a current liability column, which would suggest that the liability has debt that needs to be repaid attached to it.

Dealing with Pending Transactions. Make sure everyone “closes the books” at the same time and is dealing with accruals and deferred income/expenses the same way across all departments. Informing everyone who touches the accounting, billing, or payroll of whether your agency is on a “cash basis” or “accrual basis” is important to maintain accuracy and consistency on your end-of-year reports.

Closing and Securing the Books. To prevent a transaction in the new year from affecting the previous year’s books, it is important to preserve the finalized balance and, if possible, lock those items into place so that an expense from the current year does not accidentally get booked in the previous year. Black Mountain Software has a built in feature that closes the months of prior fiscal years to prevent unintended entries.

Reviewing end-of-year financial reports is not only good practice; it also helps guarantee accuracy for future financial reports and future budgeting. A quick once-over and examination of any items that look over/under stated can make a big difference in the long run.

Share This Post:

This entry was posted in Accounting Basics, Best Practices, BMS Products, Government Accounting Standards, Office Efficiency, School Software, Technology, Utility Billing and tagged , , , , , , , . Bookmark the permalink. Follow any comments here with the RSS feed for this post. Both comments and trackbacks are currently closed.