Annual financial statements are purely routine work? No! It is true that all professionals have a perfect command of their accounting software and know all the legal provisions very well. Nevertheless, annual accounts can never be purely routine. Why not? Quite simply: because the data for accounting comes from people. From the salesperson. From the product manager. From the marketing manager. From the caretaker. - People who implement new ideas, face new challenges and use new suppliers, service providers and services every year.
The real challenge for the annual financial statement lies in the completeness and correctness of the entries. Here is a small guide to help you prepare the annual financial statement perfectly.
The very first step is to take care of the "hard" data on the funds:
This information comes from account statements, securities lists and the inventory.
Before we even begin to think about depreciation, profits, losses, accruals, etc., we need to check that our accounting accounts match the "hard facts". This is the basis for everything else.
We all know: "No receipt, no entry". Often this is a human resource management issue - employees need to be encouraged to submit outstanding payment vouchers, expense claims and other submit relevant documents in due time. Here it is important to set clear deadlines and to demand confirmation from the departments that all receipts have been submitted. Of course, the receipts should be checked promptly. It is always annoying when you only notice weeks later that a payment voucher for 3,452 euros is not self-explanatory and the employee in question is on holiday...
Depreciation is a science in itself. There are not only a number of different depreciation methods, but also a colourful bouquet of rules and exceptions. Smart accountants therefore leave this discipline to their tax advisors. But beware: a smart depreciation policy requires accurate data! So make sure that all assets are documented in detail:
It is best to keep a central table that is linked to the original documents. (Tip: In Excel you can also insert links to local files).
Did you know that your own invoices are more often forgotten in accounting than supplier invoices? No joke. The reason is simple: if a supplier invoice is forgotten, a reminder flutters into the house. If your own dunning system does not work perfectly, receivables remain open longer than planned.
The following procedure has proved most successful:
In order for income and expenses to be allocated on an accrual basis, accruals and deferrals must be made:
Do not forget: When the new financial year opens, these items must be posted back again.
The easiest to check are paid invoices: These are reliably documented in the bank accounts and only need to be reconciled with the accounting accounts.
The recording of outstanding liabilities (accrual accounting) is more tricky. Here, too, ask your colleagues. Who still has open invoices on the desk that relate to the old business year?
The most sensitive, however, are liabilities that have not yet been invoiced:
Normally, such contracts are managed by the operational departments, not by the accounting department. Of course, we have to ask the departments to report in due time all liabilities received. It is also useful to check the last annual accounts in detail: Which recurring liabilities are recorded there? Do they still exist?
The following rule of thumb applies to the accounting of such liabilities:
Accruals are fictitious expenses. They are booked to adjust the profit and loss account, i.e. to avoid overstating the profit.
Common topics for provisions are:
Provisions should also ideally be made by the tax advisor. He knows best what is possible and permitted - and what is not.
What we can prepare, however, is an accurate list of possible provisions and documentation of the known facts:
After the annual financial statement is before the annual financial statement. Exactly one year ago, accruals and deferrals were already booked, provisions were formed and, if necessary, released again. In the current annual financial statement, one should take a close look at the beginning of the business year:
With Contract Management Software ContractHero you can manage all contracts centrally. This way, you will never again miss liabilities that were entered into unnoticed by the accounting department in another department.
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