Month-end closing in ABC company is performed to finalize a snap shot of transactional activities for the previous month. It is an important activity that provides the basis for financial and management reporting of the company. It is performed for the last time for a particular month to ensure that all transactions are posted and reflected on reports. The month is officially closed when all of the month end processes are complete (including posting.) The month being closed remains open for seven additional business days in the new month in order to process all prior month transactions. There is about 20 staff involved in this process in finance department, and the system used is Oracle.
The objective of this business process is to produce financial statements reports of the previous month accurately and timely to the headquarters. Maintaining adequate financial, operational, and compliance controls in the month-end closing process will increase financial reporting accuracy, improve effectiveness, and allow ABC company to better service the needs of its stakeholders.
Audit Objectives and Scope
The review focused on the effectiveness and adequacy of the controls surrounding the month-end closing process. Specifically, I reviewed processes and procedures related to reporting of fixed assets, accounts receivable, accounts payable, payroll, tax and general ledger.
The objectives of this review are as follows:
• Understand the processes and procedures surrounding the management of closing process;
• Identify key risks inherent within the processes and procedures that may hinder the successful attainment of the function objectives;
• Identify the key controls that mitigate the financial/operational risks and/or document the control deficiencies;
• Provide assessments on key control functionality;
• Examine the efficiency, completeness, accuracy, and timeliness of the business process;
• Understand and review areas of potential fraud.
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