YEAR END PROCEDURES

WHAT IS A YEAR-END?

The year-end is the end of the financial year.

A financial year is any 12-month operating period, chosen by the charity, starting in any
month in the calendar year and ending 12 months later. Most charities opt for the
government financial year, which runs from April to March.

WHY DO WE HAVE TO CLOSE THE BOOKS?

To comply with legal requirements

To enable the organisation to report to its funders on how grants have been spent.
To enable the management committee, staff and volunteers to judge the financial
position and viability of the project(s)
To enable an audit or independent examination to be performed

WHAT ARE THE PROCEDURES TO FOLLOW?

There are two parts to performing the year-end procedures:

First the books need to be closed and adjusted to reflect the exact financial position
at the year-end.

Then, specific information has to be provided to the auditor or independent

examiner to enable them to match the value on invoices to the value actually paid
out and vice versa with money received. Hence evidence would need to be provided
to support the accounting information in the cash book etc.

CLOSING THE BOOKS

First decide a cut-off point. This is a date when further invoice processing is stopped i.e. 2
or 3 weeks after the end of the financial year. Any invoices received after this date would
be paid in the following financial year, similarly any income received should be lodged in the
bank in the following financial year.

The Cash Book: This must be updated, ensuring that the payments and receipts are
analysed and added up month by month.

Perform a bank reconciliation, highlighting all the unmatched items which will
either be income lodged or cheques paid which haven t yet been updated by the
bank and hence do not appear on the bank statement.
 Prepare a creditors list: This is a list people or organisations that we owe money to,
at the end of the accounting period, but have not yet paid. These will be the
invoices received but have not yet paid.

Prepare an accruals schedule (list). This similar to the above, but where the
creditors figures are usually known, the accruals are based on estimations, this
represents expenditure we have incurred but for which we have not yet received a
bill, such as electricity, gas and rates. These bills are received every three months,
so we have to make an allowance for these expenses by estimating a figure based
on previous bills.

Prepare a debtors list: This is a list of people or organisations that owe us money at
the end of the accounting period, but have not yet paid us. These might be people
who came on a training course but have not yet paid for their places, or those who
bought publications but have not yet paid. This may also include a funder whose
grant to us is late.

Prepare a prepayment list: This is the exact opposite of an accrual in that it relates
to the expenses or amounts that we have paid for but relate to a future period.
Common examples of these are insurance premiums and rent, which are usually paid
for in advance of use.

OTHER INFORMATION REQUIRED BY THE INDEPENDENT EXAMINER OR

AUDITOR

The Cash book and petty cash book

Bank statements for the financial year being audited
All details of the bank reconciliations done during the year
Bank paying-in books, Building Society books and cheque book stubs for the year
All invoices paid, in date order and documents to support payments that do not have
an invoice
Details of all the equipment purchased during the year i.e. fixed assets like
computers, office furniture and transport
All letters and cheque counterfoils relating to receipts and in particular grants
received and receivable
All details of salary records
Minutes of the Annual General meeting and Management Committee meetings held
during the year. Also names and addresses of members who held office during the
year
Copies of the organisation s constitution and the previous year s accounts
A copy of the Trustees Annual Report

In addition to the above remember that if you are a registered charity, you will need to
complete your annual return to the Charity Commission, and another to Companies House if
you are also registered as a limited company.
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