As the year draws to a close, it is a time to reflect on the past 12 months and to ponder what worked and what didn’t. It is also a time for us accountants to prepare for year-end financial reporting and tax return preparation.
As we wind down these last few days, we have to ask ourselves if we put into place any recommendations we received from our accounting consultants, advisors, etc., such as did we reconcile all of our balance sheet accounts? It is very common to spend a great deal of time analyzing our operations and comparing to prior year, to budgets, and to the industry, however, oftentimes, the balance sheet accounts are neglected on a regular basis, and this can lead to surprising adjustments at year-end. We recommend a review of these accounts not only at year-end, but also throughout the year. If it has not been done, we strongly recommend these accounts be reconciled as soon as possible to ensure appropriate financial reporting and tax return preparation.
Another question to consider is if you currently value your inventory with the last-in, first-out (LIFO) inventory method. If so, you must consider LIFO conformity, which requires the use of the LIFO method for both financial (book) accounting, and tax. As a result, dealerships must ensure their financial statements are adjusted for LIFO at year-end (12th month).
In summary, in addition to the items described above, there are many things to consider at year-end as you prepare for your financial and tax return reporting. The accuracy and completeness of this reporting is critical to your organization’s success.