Preparing Your Government for Calendar Year-End 2021

It is year-end time again for governments on a calendar-year basis. Planning is in full swing as the year draws to a close.

Governments that are not on a calendar year basis still need to gather information for employees, retirees, contractors and others so that those persons and organizations can file their tax information timely.

Gathering records to close can be time consuming, but necessary. Following this checklist will help the year-end planning process:

• Generate a pre-closing trial balance and check to see if fund balances / fund net positions agree to changes in fund balances and fund net positions.
• Perform bank reconciliations on all cash, sweep accounts, investments, purchase card, short-term debt, and similar accounts. Are there any electronic fund transfers or deposits that are in transit? Are there duplicated items or voids? Have unclaimed checks, abandoned property and escheat been properly reported?
• Perform a receivable reconciliation for all forms of receivables including taxation, grants, and other fee for services receivables in comparison to revenues recognized.
• Perform a payable reconciliation for payroll, payments for goods and services, employee benefits and other accruals in comparison to items expensed / expended.
• For payroll, prepare W-2s and W-3s and send them to your employees, as well as other required recipients timely.
• For contractor and other payments, prepare the various 1099 forms as required from expense journals.
• Perform a reconciliation of capital asset purchases by category as well as disposals and impairments, along with gain or loss calculation, as necessary.
• Perform a reasonableness check on depreciation and amortization.
• Perform a reconciliation of debt issuances and debt retirements along with other financing sources and uses.
• Close budgetary accounts, including lapsing or rolling encumbrances (if used) and prepare a budget to actual reconciliation after searching for all approved supplemental budgets.

For your annual financial report, remember to:

• Roll forward your management’s discussion and analysis, notes to the basic financial statements and required supplementary information. Remove all ‘stale’ information from prior years that is no longer relevant.
• For the basic financial statements, make sure the beginning balances of each fund agree without exception to last year’s audited ending balances. Any required balance adjustments for implementing new Governmental Accounting Standards Board (GASB) statements are known, but not posted until ready for audit.
• Prepare known reconciliations between governmental funds and the government-wide statements, including, but not limited to:
  • Capital assets and debt balances and transactions,
  • Revenue and expense recognition due to the different measurement focus and basis of accounting,
  • Various forms of deferred outflows of resources and deferred inflows of resources relating to pensions, postemployment benefits other than pensions, grants, taxation, and bond refunding transactions (among others),
  • Various forms of unpaid claims and judgments, environmental remediation, asset retirement obligations and leases.
• Reconcile transfers in and transfers out along with amounts due to and due from within your government and with your government’s component units.
• For component units and other separately audited entities, receive all reports and post information where required by GAAP into the accounting system, basic financial statements, and notes to the basic financial statements. Eliminate transfers to and from component units where required by GAAP for blended component units.
• Close and reconcile internal service fund transactions to governmental funds and proprietary funds where necessary.
• Post required reviewed and approved adjusting entries to your accounting system.
• Run a final trial balance.

Be strategic all year long with these year-end planning strategies.

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Year-End Data Checklist

We have realized very quickly throughout the pandemic that if your citizens and your employees are precious resources, your data is not far behind. Backing up your software is as essential as testing the backup periodically by performing a full restore. Backups should be stored offsite, ideally with a cloud-based solution.

The final trial balance should be compared to what is in the system with no exceptions encountered before closing the period. All exceptions must be closed with adjustments documented and approved by senior management. If ready and if possible, perform a test run to make sure the process works.

Once everyone is comfortable, your government is audited, your reports are delivered, close the period.

A cybersecurity incident can be extremely damaging to your government’s data. It’s important to prepare and protect your organization.

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The Importance of Preparing Your Books for Year-End

These are just a few of the items to consider as you prepare for year-end. Make sure you take the time to gather the correct information and talk with your Eide Bailly professional so you can close out year-end and start 2022 strong and strategically.

Governments who are proactive and strategic in their year-end planning are better set up to start the new year strong.

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