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The Fast Close Toolkit

The Fast Close Toolkit

  • Author:
  • Publisher: John Wiley & Sons_
  • ISBN: 9781119554493
  • Published In: November 2019
  • Format: Hardback , 432 pages
  • Jurisdiction: U.S. ? Disclaimer:
    Countri(es) stated herein are used as reference only
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  • Description 
  • Contents 
  • Author 
  • Details

    This publication focuses on the critical methods that can be used to dramatically improve the fiscal closing process.

    The Record to Report (R2R) or Fiscal Closing Process is at the core of the controllership function. The process includes transaction processing, internal and external reporting, and the internal controls—the people, processes, and technology—that constitute the corporate organizational hierarchy. CFOs, controllers, and corporate finance departments require timely, accurate, and consistent data to make appropriate operational and strategic decisions and fulfill statutory, regulatory, and compliance requirements with accurate and timely data. The Fast Close Toolkit offers both strategic and tactical suggestions that can significantly improve the fiscal closing process and provides guidance on new legislation requirements, systems and best practice processes. Checklists, templates, process narratives, and sample policies are provided for every component of the fiscal close.

    Investors and shareholders expect fast and easy access to the data created by current business activities in the information-driven digital age. The Fast Close Toolkit provides the necessary tools and expert advice to improve the fiscal closing process. Authoritative and up to date, this book:

    • Identifies the bottlenecks that can impact the and improvethe fiscal close process and provides best practices to help alleviate these challenges
    • Defines the Record to Report (R2R) and recommends the roles and responsibilities for fiscal close processes flow
    • Offers the internal controls to use for the end-to-end fiscal close process
    • Describes approaches for risk management, R2R, and fiscal close benchmarking
    • Identifies KPIs for all aspects of the R2R process
    • Provides the mechanism for developing a financial close scorecard
    • Recommends leading practices for both external and internal reporting
    • Provides guidance on how strategic planning, the budget and forecast processes can be streamlined to enhance the fiscal close and internal reporting results

    Written by a respected expert on internal controls and the fiscal closing process, The Fast Close Toolkit is a valuable source of information for professionals involved in controllership and have responsibility for the fiscal close.

  • Preface xiii

    How This Toolkit is Organized xiv

    Guide to Toolkit Organization xv

    Table of Best Practices xvii

    Table of Policies xviii

    Table of Checklists xviii

    Table of Process Narratives xviii

    Table of Standards of Internal Control xix

    Introduction 1

    Improving the Fiscal Close 3

    Best Practice 1: Consider the Use of a Single ERP System 4

    Best Practice 2: Employ Cloud-Based Computing 5

    Chapter 1: Why the Continued Focus on the Fiscal Closing Process? 7

    An Overview of the Fiscal Close 9

    Cycle Time to Monthly Close 10

    Chapter 2: Key Pain Points and Bottlenecks 13

    Chapter 3: The Components of the Fiscal Close 15

    Cutoff Dates 16

    Best Practice 3: Implement Cutoff Dates 16

    Chapter 4: Governing the Fiscal Close Process 19

    Best Practice 4: Implement a Fiscal Close Governance Process 20

    Composition of GAAP 21

    GAAP Hierarchy 22

    Other Disclosure Standards 22

    Chapter 5: The Transaction Accumulation, Reconciliation, and Sub-Ledger Close 27

    Best Practice 5: Complete General Ledger Reconciliations 30

    Accounting Bodies 31

    Other Regulatory Requirements 31

    Chapter 6: Introduction to the Standards of Internal Control 33

    Best Practice 6: Implement an Internal Controls Program 34

    Ensuring Success 36

    Chapter 7: Roles and Responsibilities During the Fiscal Close 39

    Tactical Responsibilities 40

    Executive Responsibilities 43

    Chapter 8: The General Ledger and Trial Balance 45

    Chapter 9: The Common Chart of Accounts 47

    Best Practice 7: Implement a Common Chart of Accounts 47

    Sample Chart of Accounts 49

    Chapter 10: Cost Centers 53

    Best Practice 8: Define Business Rules for Establishing Cost Centers 54

    Best Practice 9: Define Allocation Risks 55

    Common Allocation Challenges 57

    Best Practice 10: Implement an Indirect Cost Allocation Methodology 59

    Chapter 11: The Journal Entry Process 63

    Best Practice 11: Streamline Recurring Journal Entries 64

    Chapter 12: Spreadsheet Controls 65

    Best Practice 12: Address Spreadsheet Risks and Implement Controls 65

    Balancing Risks with Controls 67

    Chapter 13: Checklists for the Transaction Accumulation, Reconciliation, and Sub-Ledger Close 69

    Checklist 1: Transaction Accumulation and Fiscal Close Checklist 69

    Checklist 2: Fiscal Year-End Close Sample Schedule 72

    Checklist 3: Accounts Payable Roles and Responsibilities Year-End Checklist 73

    Checklist 4: Reconciliation Template 74

    Chapter 14: Sample Policies for the Transaction Accumulation, Reconciliation, and Sub-Ledger Close 75

    Policy 1: Account Reconciliation Policy 75

    Policy 2: Accounts Payable Accruals 78

    Policy 3: Spreadsheet Controls 81

    Controls Standards 83

    Best Practice Guidelines 84

    Chapter 15: Process Narratives for the Transaction Accumulation, Reconciliation, and Sub-Ledger Close Process 87

    Process Narrative 1: Journal Entry (JE) Process 87

    Process Narrative 2: Management Approval of Journal Entries 88

    Process Narrative 3: Other Current and Long-Term Assets 89

    Process Narrative 4: Other Current and Long-Term Liabilities 92

    Chapter 16: Standards of Internal Control for the Transaction, Accumulation, Reconciliation, and Sub-Ledger Close Process 97

    Standards of Internal Control 1: Journal Entry (JE) Process 97

    Standards of Internal Control 2: Management Approval of Journal Entries 99

    Standards of Internal Control 3: Other Current and Long-Term Assets 101

    Standards of Internal Control 4: Other Current and Long-Term Liabilities 109

    Chapter 17: Corporate Close and Consolidation 117

    Differences Between IFRS and U.S. GAAP That Impact the R2R Process 118

    How Often are New IFRS Pronouncements Issued? 119

    Is IFRS, as Issued by the IASB, the Same for All Companies and Industries, in All Countries? 119

    What is The Principal Standard Governing Conversion to IFRS? 120

    Does IFRS Use the Same Financial Statements as Those Required under U.S. GAAP? 121

    How Will IFRS Impact Internal Control Reporting and Certification under the Sarbanes Oxley Act of 2002? 122

    Chapter 18: The Number of Consolidation Points 123

    Best Practice 13: Automate the Consolidation Process 124

    Best Practice 14: Include the People Who Impact the Close 124

    Best Practice 15: Create Consistent Closing Schedules 124

    Best Practice 16: Consider Fiscal Close Process Improvements 125

    Chapter 19: The Number of Closing Cycles 127

    Best Practice 17: Reduce the Number of Closing Cycles 127

    Chapter 20: Post-Closing Entries 129

    Financial Closing Strategies 129

    Best Practice 18: Develop Business Rules for Post-Closing Entries 130

    Chapter 21: Communication and Accountability 131

    Fiscal Close Postmortem Meetings 132

    Chapter 22: Financial Statement Assertions 133

    Financial Statement Assertion Requirements and Application 134

    Chapter 23: Checklists for the Corporate Close and Consolidation Process 137

    Checklist 5: Corporate Close and Consolidation 137

    Checklist 6: Executive-Level Closing Checklist 139

    Checklist 7: Twenty Critical Areas to Review at Year-End 142

    Checklist 8: The Year-End Financial Statement Checklist 143

    Checklist 9: The Year-End Transaction Checklist 144

    Checklist 10: The Year-End Payroll Process Checklist 146

    Chapter 24: Sample Policies for the Corporate Close and Consolidation Process 149

    Policy 4: Fiscal Close and Consolidation Process 149

    The Timely Communication of Delays 152

    Adjustments Requested by Field and Corporate Personnel 152

    Adjustments Between Preliminary and Final Results 153

    “Late” Adjustments 153

    Chapter 25: Process Narratives for the Corporate Close and Consolidation Process 155

    Process Narrative 5: Balance Sheet Consolidation 155

    Process Narrative 6: Assets Held for Sale Due to Discontinued Operations 157

    Chapter 26: Standards of Internal Control for the Corporate Close and Consolidation Process 161

    Standards of Internal Control 5: Balance Sheet Consolidation 161

    Standards of Internal Control 6: Assets Held for Sale Due to Discontinued Operations 164

    Chapter 27: Analysis and Reporting (The Final Mile) 169

    Chapter 28: Internal and External Reporting 171

    Internal Reporting 171

    Best Practice 19: Ask Key Questions to Define Your Internal Financial Reporting Process 172

    External Reporting 175

    Chapter 29: Budgeting and Forecasting 181

    About the Budget Process 182

    Types of Budget Processes 182

    Best Practice 20: Consider Five Steps for a Successful Budget Process 184

    Ten Considerations for a Successful Budget Process 188

    Variance Analysis 191

    Other Factors to Consider 192

    Corporate Performance Management (CPM) 194

    A Moving Target 194

    Chapter 30: Reduce Fiscal Close Cycle Times by Moving Your Finance Function to “Dynamic” Budgeting and Planning 197

    Dynamic Budgeting and Planning 197

    Chapter 31: Fixed Assets and the Capital Budget 199

    Best Practice 21: Establish a Capital Budget Process 199

    Developing the Capital Budget 200

    Best Practice 22: Implement the Capital Review and Approval Board (CARB) Process 201

    Construction in Process Accounting 207

    Fixed Asset Management 207

    Depreciation Methods 208

    Intangible Assets 211

    Asset Appreciation and Asset Impairment 212

    Disposal of Fixed Assets 214

    The Capital Budget and Fixed Assets Business Process Risks and Challenges 217

    Chapter 32: The Forecast Process 221

    About the Forecast Process 222

    Types of Forecasting Models 222

    The Forecasting Process for Small Businesses 224

    Chapter 33: The Fiscal Close and Strategic Planning 227

    Expected Outcomes of the Strategic Plan 227

    Best Practice 23: Include Finance and Accounting in the Strategic Planning Process 228

    Best Practice 24: Use a Strategic Planning Readiness Checklist 229

    Best Practice 25: Follow These Seven Steps for Your Strategic Planning Process 230

    Best Practice 26: Implement Six Key Elements for Your Strategic Plan 230

    Best Practice 27: Use a Standardized Table of Contents for Your Strategic Plan 231

    Strategic Planning Methodologies 232

    Best Practice 28: Establish Performance Metrics to Determine the Effectiveness of Your Strategic Plan 236

    Chapter 34: Analytics to Detect Financial Statement Fraud 237

    Best Practice 29: Use Red Flags to Detect Financial Statement Fraud 238

    The National Commission on Fraudulent Financial Reporting (The Treadway Commission) 240

    Use Detection Methods for General Financial Statement Fraud 243

    Chapter 35: Checklists for the Analysis and Reporting Process 247

    Checklist 11: Quarter-End Fiscal Close (10Q) 247

    Checklist 12: Year-End Fiscal Close (10K) 251

    Checklist 13: Performing Financial Statement Analysis 257

    Checklist 14: Trend Analysis 264

    Chapter 36: Sample Policies for the Analysis and Reporting Process 271

    Policy 5: Basic Policies on Financial Reporting 271

    Chapter 37: Process Narratives for the Analysis and Reporting Process 273

    Process Narrative 7: Disclosure Checklist 273

    Process Narrative 8: Fluctuation Analysis 274

    Process Narrative 9: Cash Flow Statement Reconciliation 276

    Process Narrative 10: Reporting Debt 277

    Chapter 38: Standards of Internal Control for the Analysis and Reporting Process 283

    Standards of Internal Control 7: Disclosure Checklist 283

    Standards of Internal Control 8: Fluctuation Analysis 284

    Standards of Internal Control 9: Cash Flow Statement Reconciliation 287

    Standards of Internal Control 10: Reporting Debt 290

    Chapter 39: The Virtual Close: Myth or Reality? 299

    What is the Virtual Close? 299

    How is the Virtual Close Different from the Soft Close? 300

    Case Study: The Virtual Close at Cisco 300

    Implementing a Virtual Close 303

    Chapter 40: Roadmap: Benefits of the Fast Close 305

    Different Types of Fast Fiscal Closing Processes 306

    Soft Close 306

    Virtual Close 307

    Legal Issues Impacting the Fast Financial Close 307

    Steps to Achieve a Faster Financial Close 307

    Conclusion 310

    Chapter 41: Accelerating the Close with Automation 311

    Key Requirements for Automating the Fiscal Close 311

    Key Questions to Ask During Implementation 312

    System Ease of Use 312

    Quality of Financial Information 313

    Accounts Payable and Purchasing 314

    Project Accounting 314

    Addendum: Fast Close Tools and Additional Best Practices 315

    Contingency Planning 315

    Best Practice 30: Establish Escalation Procedures 322

    Roadmap: 25 Steps to Shorten the Fiscal Close 323

    The Monthly Financial Close Process Checklist 327

    Foreign Corrupt Practices Act (FCPA) 336

    Accelerate Your Financial Close: A 35-Step Roadmap 337

    The Fast Close Compliance Toolkit 340

    The M&A Due Diligence Checklist 362

    Finance and Accounting Key Business Partnerships Matrix 372

    Fiscal Close Risks and Challenges 374

    Fiscal Close Standards of Internal Control 376

    The Fiscal Close Dashboard 379

    The Controller’s Dashboard 380

    The Detailed Fiscal Close Scorecard 380

    The Project Management Toolkit 382

    Glossary 387

    Index 403

  • CHRISTINE H. DOXEY, CAPP, CCSA, CICA, CPC, is president of Doxey, Inc., a consultancy that has brought vast improvements to the finance departments of leading organizations worldwide. Doxey is on the Advisory Boards of The Exchange Summit and The Institute for Internal Controls. Previously, Christine was a financial executive at Hewlett Packard and Verizon Business. She has authored several books and speaks on a range of financial processes and internal controls best practices at global conferences.

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