Financial Statement Preparation Checklist

Check the client portal (SmartVault, Liscio, or TaxDome) for operating-bank, credit-card, and loan statements through period end. Missing statements are the most common reason close slips past day three.

Verify the last pay date in the period has cleared and federal/state tax deposits are recorded in Gusto, ADP, or Paychex. If pay date falls after period end, the unpaid days will be picked up in the payroll accrual later.

Pull the AP cutoff report and the unbilled-revenue listing. Bills dated within the period but received late need accrual; revenue earned but not yet invoiced needs to be recorded so income matches the period.

Run the A/R aging summary and compare the total to the GL receivables balance. Differences usually mean a journal entry hit GL receivables directly without going through the customer sub-ledger — investigate before moving on.

Pull the unapplied-payments report. Apply each open credit to the correct invoice, or flag for the client if no matching invoice exists. Carrying unapplied payments overstates A/R and understates cash receipts.

Review invoices over 90 days and any in dispute. Update the allowance for doubtful accounts per the firm's policy — specific identification or aged-percentage method. Decide whether any specific receivables should be written off this period.

Debit bad-debt expense and credit the allowance for doubtful accounts (or the receivable directly if writing off). Document customer name, invoice numbers, and reason in the JE memo so the entry survives peer review.

Run the A/P aging summary and reconcile the total to the GL payables account. Direct journal entries to AP that bypass the bill-entry process are the most common source of reconciling differences.

Identify services received in the period where the bill has not yet arrived — legal, professional services, utilities. Post an accrual JE to expense and accrued liabilities; reverse it next month when the actual bill posts in Bill.com or Ramp.

For top vendors, request a statement and reconcile to the AP sub-ledger. Catches duplicate-bill entry and missed credits before they hit the year-end audit and turn into a partner email.

Use the bank-feed reconciliation in QBO or Xero. Confirm beginning balance ties to last month's reconciled ending balance. Outstanding checks over 30 days and deposits in transit over 5 days warrant investigation, not just acceptance.

Match every credit-card transaction to a categorized line in the GL. Resolve any "Ask My Accountant" items with the client before close — letting them age is how the suspense balance becomes unmanageable.

List every uncleared transaction over 30 days old. Void truly stale checks per state escheatment rules and reverse the original entry. Document the workpaper for partner review at quarter-end.

Add new acquisitions, remove disposals, and confirm the schedule's beginning balance matches the prior-period ending balance. Tie the ending balance to the GL fixed-asset accounts by class.

Calculate book depreciation per the schedule (typically straight-line; MACRS is handled separately at tax time on Form 4562). Debit depreciation expense and credit accumulated depreciation by asset class.

Apply the firm's capitalization policy — commonly $2,500 per item under the Section 1.263(a)-1(f) safe harbor, or higher with an AFS election. Items below the threshold expense to repairs and maintenance; items above are added to the FA schedule with useful life and method assigned.

If period end falls mid-pay-period, accrue gross wages, employer FICA, and benefits for the unpaid days. Reverse the accrual when the next payroll posts so wages don't double-count.

Reduce each prepaid expense (insurance, software subscriptions, rent) by the period's allocation. The amortization schedule should be a standing workpaper tied to each prepaid balance, not recalculated each month.

For multi-period contracts, move the period's earned portion from deferred revenue to revenue. Confirm recognition timing matches the ASC 606 performance-obligation analysis documented at contract inception.

Every AJE needs a memo, supporting workpaper, and partner sign-off before posting. Skip the sign-off and the audit trail breaks — the most common peer-review finding for small firms.

Compare each account to prior month and prior year. Flag accounts with greater than 10% variance or $5,000 absolute change for explanation. Common false alarms: timing differences in accruals; common real issues: misposted journal entries that bypassed sub-ledgers.

For each flagged variance, confirm the explanation with operations or the client controller. Document the explanation in the trial-balance workpaper. If the variance traces to an error, post a correcting JE before running statements.

Run all three statements with current period, YTD, and prior-year comparatives. Use the indirect method for cash flow. Confirm net income on the income statement equals the change in retained earnings on the balance sheet — if it doesn't, an entry posted directly to RE.

Set the closing date in QBO and apply a closing-date password. This blocks post-close edits to closed-period transactions, which is the critical control for audit-trail integrity. Capture sign-off and any commentary the partner wants attached to the close package.

Send the report package via the client portal — never email. Financials carry SSNs and bank-account numbers that trigger GLBA and state breach-notification laws if leaked. Schedule the monthly review call within 5 business days of delivery.