Specifications

8  Lesson 7 Computer Tutorial 3
4. Always back up the data before posting.
5. Post the batches, which will trigger the printing of the posted batch.
6. Collect the batch listings and posting journals in a file. This file constitutes a
complete audit trail.
TOPIC 7.4
Month-end procedures
To ensure streamlined operations, a set of procedures should be implemented for the end of
each fiscal period. A common practice is to set up each calendar month as a fiscal period. In
this topic, the term ―month‖ rather than ―fiscal period‖ will be used for clarity. In some
industries, a four-week fiscal period (13 per year) is common.
If month-end procedures have been properly designed and supervised, operating the general
ledger takes little effort. Without established procedures, however, it may be difficult and
time-consuming at year end to determine the exact status of the general ledger, and to adjust
and close the accounts for the year.
Many companies have recurring month-end transactions routinely entered, for example,
mortgage payments or rent, amortization of capital assets, and allocation of prepaid expenses
such as insurance.
You can precode these entries in a recurring batch. An example of a recurring transaction is
monthly straightline amortization expense, assuming that no additions or deletions are made
to the capital assets. When you set up a recurring batch, you enter the period of recurrence
(monthly or quarterly), the amounts and accounts, and then save the batch and post it as
required.
At month end, you should also review the trial balance to determine if any adjustments are
required to the general ledger accounts. (See Lesson 5 for a description of this process.)
Note that recurring batches can also be used for transactions using the same accounts but
different amounts. Before posting, adjust the amounts.
Recommended month-end procedures
The following month-end procedures for the general ledger are recommended:
1. Perform a bank reconciliation and account for all outstanding cheques and deposits in
transit. Replenish petty cash if necessary. (You should have covered this step in
FA1.)
2. Enter (or retrieve and amend if necessary) and post month-end recurring batches and
quick transactions as required. (See Lessons 3 and 7.)
3. Print the preliminary trial balance at the end of the month. (See Lesson 2.)
4. Review the trial balance and determine if any adjustments are necessary. Determine
if any month-end accruals are necessary. (If you are unsure of this step, a review of
FA1 and Lesson 5 of this tutorial will help.)
5. Enter the adjustment transactions into a batch. Print the batch listing. (See Lesson 3.)
6. Back up the general ledger and post the adjustment transaction batch, which will
automatically print the posting journal. (See Lesson 4.)