Accounting Compliance Checklist for Year-End Reporting

As a business operating in India, the importance of account compliance and reporting at the year-end can’t be overstated. Adhering to regulatory requirements, such as the Companies Act and Tax Act, is essential to mitigate legal risk. Moreover, it ensures accurate financial reporting. This accuracy reflects the business's financial health and improves its credibility with stakeholders.

At PKPConsult, we offer bookkeeping, transfer pricing reports, accounting compliance, and reporting services to prepare an efficient system for our clients. It is a systematic approach to compliance facilitated by a comprehensive checklist. It streamlines the accounting process, reduces the likelihood of errors, and prepares the business for audits.

➢Verify All Transactions Are Accounted For

Review your general ledger to ensure that every transaction—revenue, expense, or adjustment—has been accurately recorded. Missing transactions can lead to inaccuracies in financial statements, affecting both internal analysis and external reporting. Conducting a thorough review at this stage minimizes the risk of errors later in the reporting process.

Tips:

• Our team will compare bank statements with recorded entries.
• Confirm all cash and credit card transactions are logged.
• Reconcile all inter-company transactions, if applicable.

➢Reconcile All Accounts

Account reconciliation is crucial for assuring the accuracy of your financial records. At year-end, reconcile all bank accounts, accounts payable (AP), accounts receivable (AR), and asset accounts to verify that the balances align with external statements. This process helps identify discrepancies early, allowing them to be corrected before the final report is generated.

Checklist:

• Bank account reconciliation: Ensure all deposits and withdrawals are accounted for.
• AP/AR reconciliation: Confirm outstanding invoices and payments.
• Inventory reconciliation: Check stock records against physical counts for accuracy.

➢Review Fixed Assets and Depreciation

Fixed assets like equipment, vehicles, and property often significantly impact year-end reports due to depreciation and potential asset disposals. Review your fixed assets register to ensure all new assets have been added, disposed assets removed, and depreciation accurately calculated based on your company's depreciation policies.

Steps:

• Verify additions and disposals of assets over the year.
• Calculate and apply depreciation for each asset.
• Adjust for any changes in useful life or valuation if necessary.

➢Complete Payroll Reconciliation

Payroll is a significant component of financial statements, and errors in payroll compliance can lead to regulatory penalties. Ensure all payroll data aligns with year-to-date totals and verify that deductions, benefits, and taxes have been calculated accurately. Additionally, confirm that employee records are up-to-date for tax reporting purposes.

Payroll Compliance Steps:

• Verify employee pay and deductions match payroll records.
• Review and reconcile any bonuses or incentives.
• Confirm tax calculations and benefits deductions are correct.

➢Adjust for Accruals and Prepaid Expenses

Accrued and prepaid expenses must be properly adjusted at year-end to reflect the correct expense period. Adjusting for these entries helps match costs with the revenue they generate, providing a more accurate picture of the company’s financial position.

Checklist:

• Adjust for accrued expenses: Ensure all expenses incurred but not yet paid are recorded.
• Record prepaid expenses: Allocate the portion of prepaid expenses that apply to the current year.

➢Evaluate Provisions and Contingencies

Many companies make provisions for potential future expenses, such as legal costs, warranty claims, or bad debts. Ensure that all provisions and contingencies are properly accounted for and are in line with accounting standards. This evaluation is essential for transparency, indicating the company’s preparedness for potential liabilities.

Checklist:

• Review provisions for liabilities, such as warranty claims or restructuring costs.
• Adjust for any potential bad debt by reviewing outstanding AR.

Ensure Compliance with Tax Obligations

Accurate tax reporting is essential for compliance, as tax authorities impose stringent penalties for inaccuracies. If applicable, review all tax obligations, including corporate income tax, sales tax, and VAT. Ensure all applicable tax liabilities are recorded and tax filings are accurate.

Checklist:

• Review corporate tax calculations, including deductions and credits.
• Confirm VAT/GST compliance, if applicable.
• Our team verifies that tax filing deadlines are met. Ensure taxes owed are paid on time.

➢Verify Financial Statements for Accuracy and Completeness

Once all adjustments are made, review your financial statements—including the balance sheet, income statement, and cash flow statement—to ensure they present a fair and complete view of the company’s financial performance. Cross-check each line item with supporting documentation and ensure all necessary disclosures are included to comply with regulatory standards.

Checklist:

• Balance Sheet: Ensure assets, liabilities, and equity are accurately reported.
• Income Statement: Verify all revenue and expense categories are complete.
• Cash Flow Statement: Confirm cash inflows and outflows align with actual cash movements.

➢Document and Disclose Significant Events

If the business has experienced significant events, such as major acquisitions, structural changes, or new debt agreements, these must be disclosed in the financial statements. Such events impact stakeholders’ perceptions and may influence future financial obligations or operating conditions.

Disclosures to Include:

• Major financial agreements or changes in debt.
• Changes in company structure or ownership.
• Potential legal or regulatory changes affecting operations.

➢Conduct an Internal Compliance Audit

An internal compliance audit at year-end ensures that all the aforementioned steps have been followed and provides an additional layer of verification for the financial statements. If possible, have an independent party review the reports to increase accuracy and transparency.

Audit Checklist:

• Review all documentation for completeness and accuracy.
• Confirm that all adjustments and reconciliations are verified.
• Address any findings from the audit before finalizing the reports.

➢Prepare for External Audit, if Applicable

If your business is subject to an external audit, preparing your records in advance will streamline the process and reduce stress. Ensure all financial statements and supporting documents are organized, and be ready to respond to auditor inquiries.

Preparation Tips:

• Organize all records, receipts, and reconciliations.
• Assign a point person to liaise with the external audit team.
• Review previous audit recommendations to address recurring issues.

PKPConsult: Your Trusted Accounting Partner

Completing year-end accounting compliance and reporting can be a daunting task. However, the expert team at PKPConsult will rescue you from this hassle. We follow a structured checklist to make the process manageable. With us, businesses can ensure a smooth transition into the new fiscal year while maintaining stakeholder trust and credibility.