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STRATEGIC ISSUES...ONLINE
For week of February 7, 2005, Issue #198
 
Featured Articles:
1.  Typical Year-End Closing Procedures
2.  Fraud Newsletter Alerts
3.  Tech Tip Weekly: Using E-mail Folders Effectively
 
 
1.  Year-End Closing Procedures
 
The year-end closing process is a crucial and sometimes stressful time as business owners and members of company management anxiously await the financial reports that show the company's operating results for the year.  Here's a quick rundown of some typical year-end closing procedures.
 
Complete All Payroll Processes
Make sure that all payroll processes have been completed before proceeding with the close.  Those processes include processing all payroll checks for the current payroll year (through December 31) and preparing, reconciling, and filing Forms 1099 and 1096 and all payroll reports, such as 941s, 940,, and Forms W2 and W3.
 
Verify That All Transactions Have Been Recorded and Posted
Scan the ending balances and the transactions posted to each general ledger account to detect unusual entries or unexpected ending balances.  Also, most software packages will not allow the user to "close" the books until all entered transactions have been posted.
 
Reconcile All General Ledger (GL) Accounts and Make Necessary Adjustments
When reviewing the general ledger, many year-end balances will need to be adjusted.  The following procedures should be performed when reconciling the general ledger accounts:
- Reconcile ending general ledger cash balances to ending bank statement balances.
- Reconcile ending general ledger credit card liability balances to ending credit card statements.
- Reconcile the ending GL accounts receivable balance to the total of the Aged Receivables Report.
- Reconcile the ending GL accounts payable balance to the total of the Aged Payables Report.
- Adjust inventory quantities to agree with physical inventory counts and adjust the balances in the inventory account to lower of cost or market if necessary.
- Compute and adjust bad debt expense, and allowance for doubtful account balances.
- Verify that fixed asset purchaes and sales are recorded correctly.
- Calculate and record depreciation on fixed assets.
- Capitalize and amortize prepaid assets.
- Record interest expense on loans and notes payable.
- Adjust marketable securities to fair value.
 
Review all Vendor and Customer Accounts for Inactive Accounts
Year-end is a good time to clean up vendor and customer records.  When inactive vendors or customers are identified, consider making them inactive in the accounting system to prevent accidental postings to them.  Most software packages allow that command.
 
Print Year-End Reports
Print out all reports so that you have easy access to historical transactions printed for the year.
 
Back Up Company Data
Before running a general ledger "Close" feature, back up all company data files.  Once the closing process has begun, it generally cannot be stopped.  If anything goes wrong, having a backup that can be restored may be the only way to undo the close.
 
Run the General Ledger Software Package Close Feature
Once all of the preceding steps have been followed, the general ledger must be "closed."
 
Purge Data, if Desired
Consider purging old transactions and inactive accounts from data files to help accounting software run more efficiently.
 
 
2.  Fraud Newsletter Alerts
 
A couple of recent articles that you should take a look at...
 
Identity theft, Net scams increased in 2004 - FTC
 
Americans lost at least $548 million to identity theft and consumer fraud last year as the Internet provided new victims for age-old scams, according to government statistics released Tuesday...[click on following link]
 
 
Invitation to Steal
 
The more you automate your critical business processes, the more vigilant you need to be about protecting against fraud. [click on following link]
 
 
 
3.  Tech Tip Weekly:  Using E-mail Folders Effectively
 
Most, if not all, e-mail clients allow you to use folders to organize your e-mail.  In fact, folders are a great boon to keeping your incoming e-mail uncluttered and under control.
 
Don't confuse e-mail folders with file folders on your disk drive.  Conceptually, they're similar to each other only in that each allows you to organize information.  While some e-mail clients may use file folders to store your e-mail, many do not.  The folders are maintained within the client as a logical structure, with no relation to file folders on the hard drive.
 
Rather than leaving all your e-mail in your inbox, give some thought to how you can organize it using folders.  For instance, you could have a folder for your work-related e-mail or a folder for each project you're working on.  You could also create folders for family e-mail, hobbies, and other categories.
 
You can configure most (if not all) e-mail clients to display available folders onscreen.  The folders in MS Outlook are part of the Navigation pane.  When displayed, the pane is at the left side of the program window.
 
The Navigation pane (or its equivalent) is helpful when working with folders.  You can easily drag messages from one folder and drop them in another or move entire folders.  To create an e-mail folder, simply right-click an existing folder and choose New Folder.  Name the folder and start using it to store  messages.
Thank you for subscribing to the weekly edition of Strategic Issues...Online.  If you wish to unsubscribe to this newsletter, please Reply to this e-mail and type "unsubscribe" in the subject line and your name will be removed.  If you know of someone else who would benefit from this newsletter, please feel free to forward this on to them or send us their e-mail address and we will be happy to add them to our mailing list. This newsletter has been compiled by Prangley Marks, LLP for our clients and other interested persons.  The information presented may or may not apply to your facts and circumstances and should not be acted upon without professional advice.  
Prangley Marks, LLP
Accountants and Consultants
"The Way We Figure, We Are The Only CPA Firm You Will Ever Need"
333 Bridge Street, NW, 11th Floor Bridgewater Place, Grand Rapids, MI  49504-5356
Phone#:  616-774-9004, Fax#:  616-774-9081