Month-End Close Errors: Controller’s 20-Point Checklist

This is a practical, controller-focused checklist to prevent reclasses during month-end. It targets the common sources of error across accruals, FX, deferrals, intercompany, inventory, reconciliations, and approvals. It suits US and UK teams, including those working with offshore partners. Use it to cut noise in the close and reduce post-close adjustments. It aligns with the topic “Month-End Close Errors That Trigger Re-class: A Controller’s 20-Point Checklist.”

How to use this checklist

Run these checks before you lock the ledger. Assign an owner, a due date, and evidence for each item. For offshore workflows, verify handoffs and document SLAs. Close only after exceptions are cleared or tracked with an approved JE and root cause.

1) Accruals and cut-off

1. Unbilled AP accruals
   Match GRNI or receiving logs to unbilled invoices. Accrue by service period, not invoice date.
2. Expense cut-off
   Test the first 10 AP invoices dated next month. Accrue any prior-period services.
3. Revenue cut-off
   Tie shipped or delivered milestones to revenue events. Defer if performance obligations are open.
4. Payroll and statutory on-costs
   Accrue wages earned but unpaid. Include employer taxes (US FICA/FUTA/SUTA; UK Employer NI and Apprenticeship Levy when applicable).

2) Deferrals and amortization

5. Prepaid expenses
   Scan large-dollar AP for annual or multi-month services. Post to prepaid and amortize using service months.
6. Deferred revenue
   Review billings in advance. Defer set-up, training, or undelivered elements. Reconcile schedule to the GL.
7. Straight-line tests
   Recompute at least one material amortization and one deferral by hand to confirm the schedule logic.

3) Foreign currency (FX)

8. Spot vs month-end rate
   Use transaction-date rate for P&L, month-end closing rate for monetary balances. Confirm source and timestamp.
9. Revaluation entries
   Revalue AR, AP, cash, and intercompany balances. Review the FX reval JE ties to subledgers.
10. Translation reserve
    For UK or US parents with foreign subs, confirm CTA movements align with revalued net assets and exchange differences.

4) Intercompany

11. Reciprocal balance match
    For each pair, match AR to the counterparty’s AP. Differences over the threshold need a ticket and a fix plan.
12. Price and tax alignment
    Confirm transfer-pricing markups and correct VAT or sales tax treatment on intercompany recharges.
13. Settlement status
    Track netting or cash settlement timing. Post interest or FX as required by policy.

5) Inventory and COS

14. Receiving to invoice match
    Three-way match for significant POs. Accrue unvouchered receipts.
15. Costing and adjustments
    Verify standard or average cost updates. Review write-downs for NRV and obsolescence.
16. Cycle counts and variances
    Post approved count variances. Investigate recurring location or SKU issues.

6) Balance sheet reconciliations

17. Aging tie-outs
    Reconcile AR and AP to subledger aging. Explain debits in AP and credits in AR.
18. Suspense and clearing accounts
    Clear bank clearing, payroll clearing, and tax suspense. Nothing should age beyond one close cycle.
19. Taxes payable
    US: use sales/use tax and payroll tax filings to validate accruals.
    UK: reconcile VAT control accounts to MTD returns and payroll to RTI submissions.

7) Approvals, documentation, and governance

20. JE and reconciliation approvals
    Confirm preparer and approver stamps on all material JEs and reconciliations. Store evidence links. For offshore teams, ensure maker–checker is enforced and access rights match roles.

Quick validation before you sign off

• Trend check: Compare this month to last month and to the same month last year for revenue, margins, FX gains/losses, and working capital lines.
• Top 10 variance: For each material variance, attach a one-line driver and the source.
• Reclass tracker: List any forced reclasses, owner, root cause, and fix-by date. Aim for zero next month.

Notes for US and UK controllers working with offshore teams

• Define a close calendar with SLA checkpoints for AP cut-off, intercompany confirmation, and FX rates.
• Require annotated screenshots from source systems at handoff.
• Use a standard JE template with fields for business purpose, source doc, and policy reference.
• Keep a single truth for rates: date-stamped FX tables accessible to all.
• Run weekly “pre-close” to catch aging items in suspense, GRNI, and VAT control.

Bottom line

This Month-End Close Errors That Trigger Re-class: A Controller’s 20-Point Checklist reduces post-close fixes, improves audit readiness, and protects comparability across periods. If you want a ready-to-use close pack with templates, role assignments, and offshore handoff controls, Madras Accountancy can set it up and train your team. Book a 30-minute controller review to harden your month-end.

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