With the last VAT settlement for the 2017 financial year already presented, along with form 390, form 347, for those who have to present it, is a small distraction to face the final stretch of the balance sheet and finalize the accounting for the 2017 financial year.
During these months at the beginning of 2018, the accounting notes for the new year are combined with the 2017 accounting adjustments and reviews, which means an increase in the workload in the accounting departments.
In order to head into the final stretch of the accounting close, there are five points that it is advisable to take into account:
Review the 2017 accounting carefully
A thorough review of the 2017 accounting must be carried out, since, once the year was closed, Any error that is not corrected will be carried over to the next year., if it affects balance sheet accounts. For its part, if the error is found in the expense or income account, it will have an impact on the result and fiscal repercussions, which can generate problems with the Tax Agency and lead to responsibilities for the administrators if the result is significantly altered.
For the review of accounting, the Balance check sums and balances at the closing date of the accounting year, since with it we can check inconsistencies in the balances, or see accounts that should appear with a zero balance and are not, and it may be necessary to make some adjustments to eliminate accounting errors.
Classifies, separates and removes the documentation for the 2017 financial year from the work area.
Everything that you are no longer going to use from 2017, any paper, file or object that is not necessary for work in the new year, must be classified, separated and removed from the work area.
This is extensible for computer files, which must be organized and those that are not going to be used again should be eliminated. Computers sometimes become dumping grounds for files that are never used again.
Warns the administrator not to manipulate the annual accounts
At times, administrators may be tempted to manipulate accounting, to take the photo that best suits them for the accounting closing. Many administrators sign accounts with falsified accounting without being aware of the responsibility this entails. In this sense, the “significant” alteration of the annual accounts that entails a modification of the company's financial situation, to the detriment of the company itself or third parties, may result in custodial sentences and fines for administrators as typified by the penal code in its article 290.
Compare bank liabilities with the CIRBE of the Bank of Spain
This way you can see if there are differences and, if so, analyze them to see if they are due to some type of accounting error. It is advisable to be very clear about the reason for any deviation, since, if we request a loan and there are significant differences, the financial institution can ask us for explanations, or it can simply deny us the credit.
Don't forget any accounting adjustments
Before closing the year, a series of accounting adjustments must be made, the most common being the following:
- Reclassification of debts from long term to short term, unless this reclassification is already carried out month by month with the payment of the loan installments, something that may be operationally impractical, but which, however, indicates to us for intermediate accounts the short-term debts in all the time.
- Variation of existences to correct the result for the year based on the merchandise consumed, since the expenditure on inventories does not correspond to purchases, but to consumption. Thus, unconsumed stock must be subtracted from the purchases made, using account (61) or stock variation account (71) for this purpose; Or, on the contrary, it may happen that during the year more inventories were consumed than those purchased, and said benefit must also be reflected through the inventory variation account.
- Depreciation provisions for fixed assets to reflect the wear and tear of assets and record the corresponding expense.
- Provide all kinds of provisions It is something that must be reflected in the accounting so that the contingencies foreseen for depreciation of assets, risks, etc. are recorded.
- Accrualization of certain income and expenses, such as insurance, where the expense is adjusted to the part corresponding to the year that is closing. With the accrual of income and expenses, we are making a real distribution in the income statement of the income and expenses that we have in a year, but that cover one or several years.
- We must see if they also exist income and expenses to be distributed over several years.
- Making the corporate tax entry once all the previous settings have been made.
- Entry for regularization of income and expenses and year-end closing. Once all the operations for the year have been accounted for, all income and expense accounts are canceled, obtaining a single account that includes the profit (credit balance) or loss (debit balance), and then make the closing entry, settling all the open accounts. , debiting accounts that have a debit balance, while those that have a credit balance will be credited.
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