Year End Procedures

What is a year-end?

The year-end is the end of the financial year — any 12-month operating period chosen by the organisation. Most organisations use the calendar year (January–December); governments often use July–June.

Why close the books?

To comply with legal requirements; to report performance to stakeholders so management, boards, staff, and volunteers can judge financial position and viability; and to enable an audit or independent examination.

Procedures — closing the books

First set a cut-off point (e.g. 2–3 weeks after year-end) after which no further invoices are processed.

• Update the cash book, analysing payments and receipts month by month.
• Perform a bank reconciliation, highlighting unmatched items (income lodged or cheques paid not yet on the bank statement).
• Prepare a creditors list (owed but unpaid at period-end).
• Prepare an accruals schedule — estimated expenses incurred but not yet billed (e.g. electricity, rates).
• Prepare a debtors list (owed to us but unpaid).
• Prepare a prepayments list — expenses paid for but relating to a future period (e.g. insurance, rent).

Information your auditor/independent examiner will need

• The cash book and petty cash book;
• Bank statements for the year;
• All bank reconciliation details;
• Paying-in books and cheque stubs;
• All paid invoices in date order plus support for payments without invoices;
• Details of fixed-asset purchases (computers, furniture, vehicles);
• Letters and counterfoils for receipts;
• Salary records;
• AGM and management committee minutes;
• The constitution and prior-year accounts.

You will also need to complete your annual return to the KRA — and to the Registrar of Companies if registered as a limited company.