Month-End Close Checklist: 25 Steps to Audit-Ready...

Why Month-End Close Matters in Texas

Getting your month-end close right is crucial for Texas businesses. Whether you're preparing for tax season, seeking funding, or just want accurate financials, this comprehensive checklist ensures your books are audit-ready and decision-useful.

Texas businesses face unique challenges:

• Complex sales tax requirements across jurisdictions
• Oil and gas industry accounting complexities
• Agricultural and ranching specific rules
• Multi-state operations with nexus considerations

A proper month-end close ensures compliance and provides the financial clarity needed for growth.

Pre-Close Preparation (Days 1-2)

1. Gather All Source Documents

• Bank statements (checking, savings, credit cards)
• Credit card statements
• Loan statements
• Petty cash logs
• Vendor invoices
• Customer payments
• Payroll reports
• Utility bills
• Rent/lease agreements

2. Review Bank Reconciliation Status

• Ensure previous month is fully reconciled
• Note any outstanding checks or deposits
• Identify any unusual transactions
• Flag items for follow-up

3. Update Accounts Receivable

• Post all customer payments
• Send statements to past-due customers
• Write off bad debts (with proper documentation)
• Update allowance for doubtful accounts

4. Update Accounts Payable

• Enter all vendor invoices
• Process all approved bills for payment
• Review for duplicate billings
• Update vendor files with new terms

Transaction Processing (Days 3-4)

5. Record Monthly Journal Entries

• Depreciation expense
• Amortization of intangible assets
• Prepaid rent adjustments
• Accrued expenses (utilities, salaries)
• Inventory adjustments

6. Process Payroll Accruals

• Accrue salaries and wages
• Record payroll tax liabilities
• Update payroll clearing accounts
• Process final payroll of the month

7. Reconcile Credit Card Accounts

• Match all transactions to receipts
• Identify personal vs. business charges
• Reclassify transactions as needed
• Process chargebacks or disputes

8. Update Inventory Records

• Physical inventory count (if applicable)
• Adjust for shrinkage or spoilage
• Record cost of goods sold
• Update inventory valuation

Texas-Specific Compliance (Day 5)

9. Sales Tax Calculations

• Calculate Texas sales tax collected
• Record sales tax payable
• Review exemption certificates
• File sales tax returns (if due)

10. Franchise Tax Considerations

• Review margin for Texas franchise tax
• Calculate estimated payments
• Update deferred tax assets/liabilities
• Prepare for annual report

11. Property Tax Accruals

• Calculate property tax accruals
• Update fixed asset registers
• Review depreciation schedules
• Prepare for ad valorem tax payments

Financial Reporting (Days 6-7)

12. Prepare Preliminary Financial Statements

• Income statement
• Balance sheet
• Statement of cash flows
• Key performance indicators

13. Review Revenue Recognition

• Ensure proper cutoff
• Review long-term contracts
• Check percentage of completion
• Update deferred revenue

14. Expense Analysis

• Review all expense categories
• Identify unusual variances
• Reclassify expenses as needed
• Update budgets vs. actuals

15. Balance Sheet Reconciliation

• Reconcile all balance sheet accounts
• Clear suspense accounts
• Review intercompany transactions
• Update equity accounts

Audit Preparation (Day 8)

16. Documentation and Support

• Gather all supporting documentation
• File invoices and receipts
• Update account reconciliations
• Prepare audit work papers

17. Internal Controls Review

• Test segregation of duties
• Review approval processes
• Check for proper authorizations
• Update policies and procedures

18. Compliance Testing

• Review tax compliance
• Check regulatory filings
• Update insurance certificates
• Verify license renewals

Final Close Procedures (Day 9)

19. Final Adjustments

• Record adjusting entries
• Update reserves and allowances
• Process reclassifications
• Clear temporary accounts

20. Final Reconciliation

• Complete bank reconciliations
• Reconcile all subsidiary ledgers
• Clear all suspense accounts
• Verify account balances

21. Financial Statement Finalization

• Prepare final financial statements
• Calculate financial ratios
• Update comparative figures
• Prepare footnotes and disclosures

22. Management Reporting

• Prepare management reports
• Update dashboards
• Calculate KPIs
• Prepare board presentations

Post-Close Activities (Day 10)

23. Archive Records

• File all source documents
• Backup accounting files
• Update document retention logs
• Secure sensitive information

24. Plan for Next Month

• Update calendar for recurring tasks
• Review process improvements
• Update checklists and procedures
• Schedule training as needed

25. Continuous Improvement

• Review close process efficiency
• Identify bottlenecks
• Implement process improvements
• Update standard operating procedures

Texas Business Considerations

Remember these Texas-specific items:

• Sales Tax: Multiple rates across cities and counties
• Franchise Tax: Margin-based calculation
• Property Taxes: Paid in arrears, due by January 31
• Oil & Gas: Complex revenue recognition
• Agriculture: Specific depreciation rules

Need Help with Your Month-End Close?

Month-end close can be complex, especially with Texas-specific requirements. Our team specializes in getting Texas businesses audit-ready quickly and accurately.

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This checklist is designed for Texas businesses. Requirements may vary based on your industry and size. Consult with your CPA for specific compliance needs.