The holidays are fast approaching, and with them, all the stress of the season. Santa is making his list and checking it twice, and we accountants can follow his lead to keep a little sanity in our 2012 closeout activities.
Here’s my recommended year-end to-do list:
Account reconciliations—Yes, ideally these were performed on a monthly basis, but if other priorities shunted them aside, now is the time to get them done. And it’s a good idea to review all your current reconciliations to see if any items need resolving before you ring in the new year.
Impairment analysis—Have you attempted to identify indicators that might affect your asset valuation? Have you documented your findings in an accounting memo for your records? No? Get on it!
Inventory of non-routine business transactions with accounting or disclosure implications—If you haven’t already, prepare an accounting memo summarizing each of these transactions, and for each, outline the accounting policy and its basis in GAAP. It’s best to prepare these memos close to the time of the transaction, while the information is readily available and the details are fresh in your mind, but if other demands took precedence, catch up—before you close your books and invite your auditors in.
Revenue recognition—Have you been keeping good documentation for large or unusual transactions? If not, now’s the time to tackle this task. Review your revenue transactions and make sure you have a well-written accounting memo documenting the basis in GAAP for your revenue recognition conclusions. Also, make sure you have copies of the relevant contract or other pertinent information. Is VSOE important to your revenue recognition policy? If so, ensure that you have maintained it by updating or testing it.
SOX annual controls—By definition, these controls are performed once a year. Take a look through your SOX documentation and make sure you have a complete list of everything you need to do. It’s easy for something to fall through the cracks. Speaking of which, do you have SOC 1 reports from all your in-scope third-party providers? Have you reviewed and evaluated them for any adverse impact on your internal controls?
Stock-based compensation accounting—Let’s be blunt: this task is a hotbed of opportunity for things to go awry. If you haven’t been through your equity records with a fine-tooth comb in a while, examine them now. Problems we commonly find range from data entry errors to missing or incomplete paperwork, surprise (at least to the accounting department) option modifications, and unsupported Black-Scholes assumptions. Check out our guide, Stock Options: Do You Have a Problem?, to avoid these and related pitfalls.
This list should help you stay on track for a smooth year-end close. Happy holidays!
