12.1 Conducting a post project review
Reviewing the closing process involves examining current processes and documenting responsibilities and related timeframes during the year, and at year-end. By mapping all, or selected key processes, a clear picture can be gained of the work steps and related controls required, making it easier to streamline and standardise work activities, eliminate unnecessary steps, strengthen controls, and prevent process errors.
Ongoing improvements in individual processes can also help to ensure that the close process remains efficient.
12.1.1 Annual process review by the Chief Financial Officer
Reporting on performance should be supplemented by an annual review of the financial statements production process. Such a review is a very important input into the subsequent year’s planning process, as it provides the opportunity to make improvements in the future, where necessary.
Aspects that should be considered in the review include:
- the involvement of senior management
- the leadership and expertise within the CFO group
- the appropriateness of information systems and other records
- the extent and reliability of internal controls
- the completeness and accuracy of the draft financial statements
- the availability and knowledge of accounting staff resources
- understanding and cooperation of business area management, other entities that collect and/or expend money on the entity’s behalf and/or shared services providers
- the cost effectiveness of the contribution made by external specialists
- the extent and timing of any work undertaken by internal audit
- arrangements with the auditor for conducting its work
- the involvement of the audit committee in reviewing the financial statements
- any issues raised by the CFO and accountable authority affecting the financial statements
- meeting of timelines for completing individual tasks
- the effectiveness and efficiency of assurance arrangements
- the adequacy of contingency plans.
The review team should make a record of the key issues identified and distribute the document among the various contributors for comment/confirmation. The record should outline any corrective action to be taken, and allocate responsibility for those actions.
12.1.2 Consultation and distribution for the review
An assessment should involve key members of the financial statements team as well as representatives of any other contributors to the financial statements, such as business areas, accountable authority, the audit committee, internal audit and the auditor. It should also involve any new members of the team so they can appreciate the strengths and weaknesses of the previous year’s process. Larger organisations with many contributors may find it useful to supplement discussions with a survey of business areas and other stakeholders.
