A checklist is used in situations where the processes are standardized and where multiple steps need to happen in certain sequence.
That sounds much like a financial closing process.
The way I recommend to use the checklist is by getting the team involved in building a list of the critical components of the monthly activities. Listing all activities and breaking them down in either activity or day of the closing will give you insight in the workload as well and may leave you to decide to reshuffle some of the activities within the team.
Agree a due date and an owner for each for the steps required. Since the checklist is owned by many players it is required that all steps have a responsible person and an area where they can sign off on once they have completed the step (date, hour).
Having the checklist signed off in real time can help tremendously in seeing whether we are on track. E.g. on Day 1 of the closing when cash has to have been applied prior to being able to look at the sales for the month, it is nice to see on the checklist who has done it and when. It avoids last minute surpirses, “Oh no, I forgot to book that royalty accrual this month”. I recommend you physically place the checklist in a central area of the finance department and have people sign off as they go along. When the controller or chief accountant wishes to know the status of the financial close he/she can simply have a look at the document and know where they are.
This is not rocket science so do not over engineer this process, but do keep your team accountable, this is a non-negotiable process that adds to the integrity of the financial closing process (yes, we are quite serious about this). I have seen companies where the checklist was automated, on a share drive or embedded as a part of their accounting system. I prefer the plain old paper version.
Finally if you are a US company signing off on SOX, you may want to have your controller sign your checklist and store on file for future audits as this is a strong tool of internal control.
In a later state we will provide several examples of good checklists. For now that’s it for today. Stay with us!