What is a close checklist?

Definition

A close checklist is a written list of every job the close still needs before statements can go out. On the books, this is a working list, not an account and not a dollar line.

Each item is a job someone must finish before statements go out. The list names the work; it does not issue the statements.

Where it shows up

Balance Sheet: Related to the tasks that get the statement issued.

P&L: Related to the tasks that get the statement issued.

Cash flow: Related to the tasks that get the statement issued.

See also: Month-End Close · Close Calendar · Account Reconciliation

You will not find a close checklist as a line on the Balance Sheet. The list is the work that makes that statement safe to issue.

The same is true of the Income Statement and the Statement of Cash Flows. Those reports are what you get after the last item is checked off.

A close calendar puts dates and owners next to the same work. The checklist is the list of tasks, not the schedule of due dates.

Owners see the result as a Financial Statement Package. Until every item is done, that pack is still a draft.

How it works

Someone writes down every task the close needs. A small shop's list is short.

Typical items include matching cash to the bank, reviewing unpaid bills, proving inventory, posting remaining adjustments, and assembling statements. Each item is a yes-or-no job.

Cash is usually first. A bank reconciliation is a checklist item because the book cash balance has to match the bank before anyone trusts the pack.

Payables, receivables, and inventory sit on the list the same way. Each account is proved, then marked done.

Missing accruals and prepaid slices wait for an adjusting journal entry. That post is its own checklist item, not a side note.

A Trial Balance is run after the adjustments. If debits do not equal credits, the list stops until the difference is found.

The last items are the statements themselves. The pack is assembled, reviewed, and sent only after the earlier boxes are checked.

Segregation of duties can appear on the list as a review step. One person records, and another person checks, so no one person controls a task end to end.

The checklist lives next to the general ledger, not inside it. Completing an item means that ledger work is done.

Example

A bookstore closes June with a twelve-item list. The items include the bank rec, unpaid bills, inventory, payroll, sales tax, prepaid rent, a Trial Balance, and the statement pack.

On July 2 the bookkeeper opens the list and works it in order. Cash is matched to the June bank statement, vendor bills are tied to the payables balance, and shelf counts are compared to the inventory account.

Adjustments are posted for prepaid rent and a late book order. The Trial Balance is printed, debits equal credits, and June statements go to the owner on July 6.

The twelve boxes are what made the pack possible. The list did not put a new line on the Balance Sheet.

If the bookstore issued June statements without a list, a job such as the bank rec could be skipped. The checklist is what makes those jobs visible before the pack goes out.

Common mix-ups

A close checklist is not a close calendar. The calendar shows when each task is due and who owns it; the checklist is the list of tasks itself.

A close checklist is not a month-end close. Month-end close is doing the work and issuing the statements, and the checklist is the list that drives that work.

A close checklist is not a supporting schedule. A supporting schedule backs up one statement line; the checklist lists every job the close still needs.

Related terms

• Month-End Close: The monthly version of the close, ending in issued financial statements.
• Close Calendar: The dated schedule showing when each close task is due and who owns it.
• Account Reconciliation: Proving that a ledger balance agrees to independent support.
• Adjusting Journal Entry: An entry made at period end to record accruals, deferrals, and corrections.
• Period Close: The general routine of finalizing the books for a monthly, quarterly, or annual period so statements can be issued.
• Segregation Of Duties: Splitting recording, approving, and payment tasks so no one person controls a transaction end to end.
• Supporting Schedule: A detailed worksheet backing up a single line on the financial statements.
• Financial Statement Package: The bundled set of statements and schedules delivered after a close.