Employee Termination Checklist (Accounting Department)

HR confirms whether the separation is voluntary, involuntary, or a reduction in force. Capture the last day worked separately from the termination effective date — they often differ when garden leave or PTO payout is involved.

Note whether the departing employee owns AP, AR, payroll, GL close, bank rec, or sales-tax filings. This drives reassignment scope and whether segregation-of-duties controls need to be rebalanced before next close.

Loop in the controller, HRBP, and IT before the announcement. For involuntary terminations, IT should be staged to disable access at the moment HR delivers the news, not after.

Include unpaid wages, accrued PTO per state payout rules (CA, MA, ND require payout; many others don't), bonus or commission earned but unpaid, and any negative balances (advances, unreturned equipment fees where allowed by state law). Run the calculation in Gusto / ADP / Paychex with a manual review before approval.

Final-pay deadlines vary sharply by state and by separation type. California requires immediate payment on involuntary termination; Massachusetts requires same-day; many others allow next regular payday. Penalties for missing the window can equal up to 30 days of wages.

Pull pending reports from Ramp, Brex, Concur, or Expensify. Approve or reject with documentation; do not let reports sit in draft after the access cutoff or they get orphaned. Reconcile the corporate card balance to zero before deactivating the card.

Federal COBRA notice must be issued within 14 days of qualifying event for groups of 20+. State mini-COBRA covers smaller employers in many states. Coordinate with the benefits broker; document the mailing date for the audit file.

Send rollover instructions for the 401(k) plan and HSA portability information. Confirm the final deferral remittance hits within the 7-business-day safe harbor — late deposits trigger Form 5330 excise and DOL VFCP filings.

Revoke logins to QBO / NetSuite / Sage Intacct, Bill.com, the bank portal, payroll provider, tax software (UltraTax, Lacerte, ProConnect), and any client portal (TaxDome, Karbon, Liscio). Time the deactivation to the HR meeting, not after.

If the employee was a check signer, ACH originator, or wire approver, file the bank's signature card update the same day. Update positive-pay and dual-control configurations. Notify the bank's treasury contact in writing.

Recover laptop, phone, hardware tokens (YubiKey, RSA), corporate card, building badge, and any home-office equipment. Document serials returned for the asset register.

Rotate any shared bank-feed credentials, Plaid links the employee configured, accounting-system API tokens, and the WISP-listed shared logins. Shared credentials are a known weak point in IRS Pub 4557 reviews.

Set an auto-reply pointing clients and vendors to the new contact. Preserve the mailbox for the document-retention period (typically 7 years for tax-related correspondence). Do not delete — accountant emails frequently surface in audits and 1099 disputes.

List in-flight reconciliations, open AJEs, pending vendor disputes, and assigned client engagements. Assign each to a named successor; don't leave a column blank.

Capture the employee's bank rec routine, sub-ledger tie-out steps, recurring AJEs, depreciation schedule, and any Excel models that aren't already in the close binder. Undocumented spreadsheets are the most common cause of post-departure close delays.

Walk through the COA quirks, vendor exceptions, customer billing oddities, and any open IRS or state notices. Record the session if the employee consents — saves hours during next month's close.

If the departure collapses approver/preparer roles onto one person (common in small departments), implement a compensating control — partner spot-review of journal entries, dual approval on wires, or rotating monthly review. Document the change for SOX or SOC audit trails.

Pull the last 90 days of journal entries posted by the employee. Spot-check large entries, recurring accruals, and any reclasses to suspense or 'Ask My Accountant.' Look for unreconciled items aging beyond 30 days on the bank rec.

If the spot-check surfaced material errors, expand the review window, notify the partner or CFO, and document remediation entries. Consider whether a forensic review is warranted before signing off the next close.

For external-facing roles, send a short note to clients, key vendors, and the bank's relationship manager naming the new point of contact. Update Bill.com vendor records, the AR collections script, and any signature blocks on recurring deliverables.

Mark the employee terminated in the HRIS, archive the personnel file per retention policy (typically 7 years post-termination for payroll records), and store the termination letter, exit-interview notes, and asset-return acknowledgment together.

Send the post-employment obligations reminder citing the specific NDA and non-solicit clauses from the original offer letter. For client-facing accountants, this commonly includes a 12-24 month non-solicit on firm clients.