5 Crucial Accounting Questions to Avert Year-End Surprises
As we near the end of the year, now is the perfect time to make sure your financials are in order to avoid unexpected issues during year-end reporting. Partnering with your outsourced accounting provider and asking a few key questions can help you gain clarity, address potential discrepancies and ensure accurate, up-to-date financial records. By tackling these matters now, you’ll prevent surprises, streamline tax preparation and set up your business for a stress-free financial close.
Here are five questions to ask your outsourced accounting provider and why they matter:
1. Are you reconciling all the balance sheet accounts monthly?
This is one of the most important questions to ask. Many bookkeepers, outsourced accountants and accounting firms don’t reconcile all accounts every month; often, they only reconcile cash monthly. This often leads to significant year-end “surprise” income adjustments because if the balance sheet is unreconciled and contains a bad balance, generally, the clean-up of that bad balance goes to the income statement.
Examples are inventory, prepaid expenses, lease accounting corrections, depreciation, accounts receivable write-offs and deferred revenue accounts.
2. Were there any adjustments you made at year-end last year?
If your outsourced accountant had year-end surprises at last year’s close, it’s important to revisit them and ask why they happened at year-end instead of during the year. You want to be assured that your accountant learned from last year and that the issue will not recur this year or in the future.
3. Do you have any year-end journal entries you plan to make this year?
This is a critical question. Be cautious if your outsourced accounting provider isn’t reconciling balance sheet accounts monthly or addressing the causes of prior year-end adjustments. If they aren’t doing this, they might not be aware of necessary year-end entries and could provide a false sense of security by saying none are planned.
Follow-up questions may include:
- What are the year-end journal entries?
- Which accounts do they impact?
- Why don’t you make journal entries for these items as they occur every month so I know where my income stands throughout the year and avoid surprises?
4. What’s your approach to year-end closing and preparation?
Determine if your outsourced accountant has a clear, structured plan for closing the books, reconciling accounts and preparing necessary financial statements and tax documents promptly. This preparation reduces the risk of last-minute scrambling and ensures your filings are accurate and timely.
If your outsourced accountant doesn’t also prepare your tax returns, discuss their plan for handing off the final financials to the tax accountants so they can begin their work.
Follow-up questions may include:
- Have you already spoken with the tax accountants about the year-end plan?
- When are you planning to hand off financial information to the tax accountant?
5. When should I expect my year-end financials to be completed?
Year-end financials include slightly more work than monthly year financials. Generally, this relates to the additional duties of filing 1099s and W-2s, etc. However, if your outsourced accountant has a smooth and structured process for reconciling and being on top of your books during the year, this added year-end work should not cause more than an additional five to 10 business days beyond your regular monthly financial timing. Your accountant should be able to give you an estimated delivery date.
By asking these five questions, you’ll establish clear expectations and be confident that your outsourced accounting provider is working to keep your business on track — without any unwanted surprises when the year ends.
Next Steps
Whether you're already using an outsourced accounting provider or are exploring the benefits of outsourcing for the first time, CBIZ is here to help. Share your needs with our outsourced accounting solutions team, and we’ll work with you to optimize your accounting processes and solve any challenges you face.
Connect with our outsourced accounting solutions team today and discover how we can support your business’s success.