Importance of Periodic Closings and General Ledger Maintenance
Monthly Closing Calendar
In order to produce accurate and reliable financial information for any reporting period during a year (e.g. month, quarter, year), the Office of Financial Operations and Systems (OFOS) requires all District agencies to review transactions on a monthly basis to ensure that they are accurately, completely, and timely posted to the general ledger. Monthly closings (routine review, analysis, and “clean-up” of general ledger accounts) provide for a more efficient annual close process with fewer required audit adjustments.
Prior to the month-end closing process, agencies must be made aware of the last date on which transactions (journal entries) may be entered into the financial system for the month. A Monthly Closing Calendar is made available to all accounting/financial staff to ensure that they are fully aware of the required deadlines.
Interim Closing
Much like the monthly closings, each interim closing provides an opportunity for the District to closely analyze and adjust as necessary the general ledger accounts before year-end. Typically, the District conducts two interim closes each fiscal year—one for the period ending March 31 and another for the period ending June 30.
In preparation for each interim closing, OFOS reviews the general ledger for the current year and reflects on past interim closings to determine the areas of financial operations (general ledger accounts) which may require closer scrutiny and examination. OFOS then develops specific interim closing instructions and makes them available to agency financial managers and their respective staffs.
Annual Closing
One of the primary functions of OFOS is to produce a timely and accurate Annual Comprehensive Financial Report (ACFR). To accomplish this task successfully, it is important that the District examine its general ledger (“book of financial records”) at year-end, which includes reconciling, analyzing, and adjusting accounts as needed to ensure accuracy, completeness, and reliability of financial data, on which the ACFR will be based. Such annual “cleanup” of the general ledger is needed to ensure the District’s audit readiness and its ability to prepare financial statements in accordance with generally accepted accounting principles (GAAP), thereby laying the foundation for obtaining unmodified (clean) audit opinions from the independent auditors.
OFOS prepares a Manual of Annual Closing Instructions each year and makes the manual available to agency financial managers and their respective staffs. To ensure that agencies have the necessary knowledge and information to accurately and efficiently complete the annual close requirements, OFOS also holds annual closing workshops that are designed as “refresher courses” for financial managers and staff but are detailed enough to sufficiently train staff members who may be new to the District’s annual closing process.