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Preparing the year end accounts for any business is, arguably, the most important function completed by the accounting team or the outsourced bookkeepers. They form the formal record of trading performance and provide the necessary evidence to the owners that the business is running profitably and that all financial controls are effective and working. Year end accounts will also be subject to an external review by auditors whose responsibility it is to make sure that the accounts have been produced in accordance with the relevant accounting standards and form a true and fair view of the business. The directors of the business ultimately have to attest that the accounts represent the business and are accurate.

There are time constraints on the production of audited accounts. The final versions have to be registered at companies house (for limited liability companies) within a specified period after the year end else the company will face a fine.

Even no-limited companies should produce their year end accounts with a sense of timeliness. A copy of these will help support any funding and financing facilities through the bank and any other credit lines that you have in place with other lenders.

Of course, the most important recipients of the year end accounts are the owners of the business. They rely on these to confirm what has been reported in the monthly management accounts and to form the basis of their continued investment in the business. At the same time that the year end financial accounts are produced it is common for the annual tax return to be prepared.

For smaller businesses, the preparation of year end accounts can seem a chore. However, for businesses of all sizes there are a number of simple actions that can make the process easier and add value as part of the normal management of the operation.

The key test is to compare the bank statement to the general ledger balance. These should match save for any small timing differences in the processing of payments and receipts.

Year end is also the time that all receivable balances should be analysed and any that are worthless written off. Likewise, a thorough and detailed review of any bad and doubtful debts should lead to write offs. Revaluation of any stock needs to take place so that the balance sheet value of inventory reflects its true value to the business. Likewise, any fixed assets need to be revalued and depreciation correctly applied to those that remain in the business.

Payroll taxes are a major factor on the businesses cashflow. If your payroll has been outsourced then you will need to validate that the correct taxes have been deducted and tally with what has been reported through the year.

For those that have been schooled in accountancy then the year end process should not present too many challenges. For most others, the discipline and precision required can be mind numbingly boring. However, as a responsible manager or owner, you have a duty to understand the bookkeeping entries and procedures so that you can interpret the accounts and use them in making decisions.

There are a number of basic and advanced ways to study bookkeeping & accountancy to help get an understanding of what is involved and to give you the basics to interact properly and knowledgeably with your accounting team, outsourced bookkeepers and auditors. These can be taken in a variety of forms from enrolling in a day release or evening programme through your local college to studying on line tutorial type programmes when and where it suits you.

Adding value to your business means understanding the monthly and annual accounts so that you are better informed about the impact of your decisions. Broadening your knowledge through enrolling to study bookkeeping & accountancy courses can help.