• Version 1.0

• Prepared by: @Lorraine Sebata

• Approved by: @Feli Capron

• Reviewed date: 2025-07-24

• Next review date: 2026-07-24

1. Purpose

This SOP details the step-by-step process for compiling and presenting financial information at the end of each month at Easyterms. Its purpose is to ensure that all relevant financial data is accurately recorded, summarized, and analyzed to provide managers and stakeholders with a comprehensive view of the organization's financial performance. By following this checklist, accounting professionals can streamline the preparation process, mitigate errors, and facilitate timely decision-making based on the latest financial insights. This SOP also ensures consistency, efficiency, and compliance with the company's Accounting Policy.

2. Scope

This SOP applies to all accounting professionals, finance staff, and relevant administrative personnel involved in the monthly financial closing and reporting process for all financial transactions and accounts of the company.

3. Related Policies

• Accounting Policy

• Customer Data Privacy Policy

• Internal Control Policy (ACC-002 - if separate)

4. Roles and Responsibilities

• Accounting Professionals / Finance Staff: Responsible for executing the steps outlined in this SOP, ensuring accurate data entry, reconciliation, and preparation of financial reports.

• CEO / Finance Manager: Oversees the monthly closing process, reviews financial statements, ensures compliance, and provides final approval for monthly reports.

• Other Departments (e.g., Operations, HR): Provide necessary financial data and documentation to the Finance Department in a timely manner.

5. Procedure: Monthly Accounts Management Checklist

The following checklist guides the monthly accounts management process:

5.1 Data Collection and Verification (Week 1 of New Month)

• 5.1.1 Collect all source documents for the month (e.g., invoices, receipts, bank statements, payroll reports, expense claims, loan disbursement/repayment records)

• 5.1.2 Verify the completeness and accuracy of all collected documents against internal records

• 5.1.3 Ensure all standardized forms and templates (Invoices, Receipts, Reconciled Statements) have been used correctly and are properly filed

5.2 Transaction Recording (Throughout the Month & Week 1 of New Month)

• 5.2.1 Record all financial transactions in the appropriate accounting software/system (e.g., general ledger, sub-ledgers) on a daily/weekly basis

• 5.2.2 Ensure proper classification of accounts (assets, liabilities, equity, revenue, expenses)

• 5.2.3 Post all journal entries for the month

5.3 Bank and Cash Reconciliation (Week 1 of New Month)

• 5.3.1 Reconcile all bank accounts with the general ledger balances. Investigate and resolve any discrepancies

• 5.3.2 Reconcile all cash accounts (e.g., petty cash) and ensure accurate balances

5.4 Accounts Receivable and Accounts Payable Reconciliation (Week 1-2 of New Month)

• 5.4.1 Reconcile Accounts Receivable (AR) subsidiary ledger with the general ledger control account. Follow up on overdue receivables

• 5.4.2 Reconcile Accounts Payable (AP) subsidiary ledger with the general ledger control account. Ensure all vendor invoices are recorded and payments are processed accurately

5.5 Fixed Assets and Depreciation (Monthly/Quarterly)

• 5.5.1 Update the fixed asset register for any new acquisitions, disposals, or impairments

• 5.5.2 Calculate and record monthly depreciation expenses

5.6 Accruals and Prepayments (Week 2 of New Month)

• 5.6.1 Identify and record all necessary accruals (expenses incurred but not yet paid) and prepayments (expenses paid in advance)

• 5.6.2 Review and adjust prior month's accruals and prepayments as necessary

5.7 Loan Portfolio Reconciliation (Week 2 of New Month)

• 5.7.1 Reconcile the loan portfolio balances in the Loan Management System (LMS) with the general ledger

• 5.7.2 Review loan loss provisions and make necessary adjustments based on credit policy and risk assessment

5.8 Payroll Reconciliation (Week 1 of New Month)

• 5.8.1 Reconcile payroll expenses and liabilities

• 5.8.2 Ensure all payroll deductions and contributions (e.g., national insurance, group health, pension, etc.) are accurately recorded and remitted

5.9 Intercompany Reconciliations (if applicable) (Week 2 of New Month)

• 5.9.1 Reconcile intercompany balances and transactions with related entities

5.10 Trial Balance Preparation (Week 2 of New Month)

• 5.10.1 Generate the unadjusted trial balance

• 5.10.2 Review for any unusual balances or errors and make necessary adjusting entries

5.11 Adjusting Entries (Week 2-3 of New Month)

• 5.11.1 Prepare and post all necessary adjusting entries (e.g., depreciation, accruals, prepayments, provisions, revenue recognition adjustments)

• 5.11.2 Generate the adjusted trial balance

5.12 Financial Statement Preparation (Week 3 of New Month)

• 5.12.1 Prepare the monthly Income Statement (Profit and Loss Account)

• 5.12.2 Prepare the monthly Balance Sheet (Statement of Financial Position)

• 5.12.3 Prepare the monthly Cash Flow Statement

• 5.12.4 Prepare supporting schedules and notes to the financial statements as required

5.13 Review and Approval (Week 3-4 of New Month)

• 5.13.1 The Chief Accountant / Finance Manager reviews all financial statements and supporting reports for accuracy, completeness, and compliance with accounting standards and internal policies

• 5.13.2 Obtain necessary approvals from senior management as per internal control policies

5.14 Reporting and Distribution (End of Month / Early New Month)

• 5.14.1 Distribute approved financial reports to relevant stakeholders (e.g., Board of Directors, Senior Management, Department Heads)

• 5.14.2 Provide analysis and commentary on financial performance and key variances

6. Documentation and Forms

• Monthly Accounts Management Checklist (this SOP)

• Standardized Invoices

• Standardized Receipts

• Standardized Reconciled Statements

• Bank Statements

• Payroll Reports

• Expense Claims

• Loan Disbursement/Repayment Records

• General Ledger and Sub-ledger Reports

• Trial Balances (Unadjusted and Adjusted)

• Monthly Financial Statements (Income Statement, Balance Sheet, Cash Flow Statement)

• Supporting Schedules and Notes

7. Training

All accounting professionals and finance staff involved in the monthly accounts management process will receive mandatory training on this SOP and related policies annually or upon significant revisions. This training will also cover the use of standardized forms and templates.

8. Review and Revision

This SOP will be reviewed annually by the Finance Department to ensure its continued effectiveness, compliance with accounting standards and regulations, and alignment with business objectives.