Version 1.0
Prepared by: @Lorraine Sebata
Approved by: @Simon Cooper
Reviewed date: 2025-07-30
Next review date: 2026-07-30
This policy applies to all finance staff involved in the preparation, review, and approval of monthly management accounts for all entities within Easyterms.
This policy outlines the principles and overarching requirements for the timely, accurate, and consistent preparation of monthly management accounts at Easyterms. Its purpose is to ensure that financial reporting provides a true and fair view of the company's financial performance and position, supports effective decision-making, and complies with internal financial policies.
This policy applies to all finance staff involved in the preparation, review, and approval of monthly management accounts for all entities within Easyterms.
Management accounts shall be prepared and made available on a monthly basis within a specified timeframe to ensure their relevance for operational and strategic decision-making.
All financial data used in the preparation of management accounts must be accurate, reliable, and reconciled with underlying source documents and systems. Comprehensive validation checks must be performed.
Management accounts shall be prepared using consistent accounting policies and procedures each month to ensure comparability over time. Any changes in accounting treatment must be appropriately documented and justified.
Prior to commencing the preparation of management accounts, the following critical prerequisites must be met:
All bank accounts for each company are reconciled.
The loan book ledger balance in the Loan Management System (LMS) is reconciled and balanced with the corresponding balance sheet figure.
A checklist approach, derived from the balance sheet and income statement, shall be utilized to systematically review and validate each line item in the financial statements.
All journals and adjustments posted during the management accounts preparation process must be supported by appropriate backup documentation (e.g., exported reports, spreadsheets, screenshots). Supporting documentation not natively stored within the accounting system (e.g., Xero) shall be captured and filed externally on the company server within the designated schedules folder for accounts.
Appropriate accruals and prepayments shall be recognized to ensure that expenses and revenues are matched to the correct accounting period, in line with the company's accounting policies. This includes, but is not limited to, accrued interest and fees, bad debt reserves, staff commissions, staff bonuses, and outstanding purchase order accruals. Schedules for accruals and prepayments shall be maintained externally and reconciled to the balance sheet figures monthly.
Capitalization of assets shall be performed as per the company's asset capitalization policy, particularly for items identified during the income statement review. Depreciation shall be calculated and posted regularly according to the depreciation schedule. A fixed asset reconciliation report shall be utilized to verify discrepancies between the asset register and the balance sheet for each asset category.
Management accounts shall undergo thorough review processes, including sanity checks on key figures (e.g., interest income against loan book size) and anomaly detection, before finalization.
Where applicable, inter-company balances and transactions must be reconciled to eliminate discrepancies and ensure accurate consolidated reporting.
Finance Department: Responsible for the preparation, validation, and initial review of the monthly management accounts.
Head of Finance/CFO: Oversees the entire process, provides guidance, and performs final review and approval of the management accounts.
Loan Officers/Collections Department: Provide necessary reports and data from the loan management system (e.g., loan aging report, deferred income report, loans written off schedule).
Software Development Team: Ensures the stability and functionality of the Loan Management System (LMS) and other financial systems.
This policy will be reviewed at least annually, or more frequently if there are significant changes in accounting standards, business operations, or system capabilities.