16 Nov Enter Closing Date
It is recommended that the closing date be changed regularly, usually after the bank reconciliation and financial statements have been prepared for the previous month. New with version 2002 the date through which the books are closed has been relocated to the Company tab for Accounting from the user password set up screen. This new format includes the ability to set a password that is unique for the closing date. Because this information is on the company preference, only the Admin password can change it.
QBRA-2004: Edit > Preferences > Accounting > Company Preference
Note: Since this change is a preference, if an Accountant makes the change when using an Accountant’s Review Copy of the file, the changes will not transfer back to the client.
As QuickBooks becomes more widely used as a bookkeeping tool by small business owners a common concern relates to the audit trail; the ability to change entries after they have been recorded. This issue is compounded for the accountant because there are no formal month (or year-end) closing procedures that must be followed. This is a double edged sword because it means that the data can be quickly and easily corrected when mistakes happen, but it can also be easily changed after the books have been reconciled, financial statements issued, and/or the tax returns have been filed. The password protection feature and related closing date helps to reduce the likelihood of such problems when used consistently. In addition, the 2002 version of QuickBooks Premier also has several new reports to assist in finding such changes.
The date through which the books are closed should be updated regularly. In a perfect world, transactions would be entered, accounts would be reconciled, and financial statements would be issued at which time the closing date would be updated. In reality, most small businesses do not use the reports available as often as they should and therefore do not institute the procedure of closing the period. Instead, they take the approach that corrections and reclassifications can be made throughout the year until the time when the accounting records are sent off to the accountant. It is the opinion of this author that that type of business management may be acceptable when there is only the owner, who is also the bookkeeper, who is also the sole decision maker. Once that situation changes, it is important to review reports timely and to revise the closing date so that reports that have been reviewed in prior months do not change.