This site uses cookies to store information on your computer. Some are essential to make our site work; others help us improve the user experience. By using the site, you consent to the placement of these cookies. Read our privacy policy to learn more.


Closing Process Best Practices Logo aicpa

  Free |   AICPA |   2014 |

This article explores closing cycle best practices with a focus on transitioning to a soft close.

Topics covered:
  • Management accounting: Technical: Financial accounting & reporting: Transactional accounting & closing processes, Foundational

19 Comments/Reflections

Joanna Davey

Joanna Davey Dec 2023

Creating a soft close process involves a lot of time and effort in order to streamline processes so that they cause fewer delays. This is a long term benefit as increases accuracy as well as reducing time speant. 
Imalka Thushari Gunawardena

Imalka Thushari Gunawardena Jun 2022

This has been an interesting and helpful article. I already used suggestions to revisit the close process activities to identify and remove non/less value-adding taks from the peak period. Automating automatic GL feeds, performing certain tasks quarterly rather than monthly and removing additional layers of approvals saved time during the close.
Jasmine Buck

Jasmine Buck Jul 2021

Very interesting article, we are already doing a lot of the suggestions at my work but there are some good ideas there to further convert to a soft close approach and therefore saving time.
Kerry Kier

Kerry Kier Dec 2018

This has been a really helpful document, I had already put in place quarterly management pack reporting with monthly checking as my organisation is mainly grant funding, which is quarterly. This document is quite americanised, but, I have saved it to go through in detail over the coming months to check if we can implement any of the time saving ideas.

Gianluca Micalella

Gianluca Micalella Oct 2018

A comprehensive review of possible automatization of closure process that can lead to soft closure.

Subsequent comparison of soft vs hard closing, bringing benefits to finance function such as: providing monthly information more current and better analysed; have more time to research what is going on / anticipate future trends; identify the root cause, re-evaluate processes, and reset operating targets.

Changes a finance function will need to work through:
  • meanwhile eliminating interim cycles, redefine the elements of the closing cycle: -Asses activities to be eliminated, deferred to quarter / annual close, moved outside the close; -Accruals to flow through subsystems naturally, only material and at quarter or annually; -Move the forecasting process away from the close cycle; -Move cost allocations off the monthly close by using fixed rates, budgeted rates, or prior month. Normally variances are insignificant.
  • Collapse the level of detail. Post allocation to a single division-level cost center.
  • Raise the materiality level (Inter-company, cross-country consolidations, and elimination)
  • Separate and integrate systems, with cost-accounting and billing system independent of GL and have IS integrated to the close process.
The author gives a very detailed excursus on streamlining those processes and explain how every single step (a percentile) can lead to consistent improvements (leading to 40-60% enhancements) focussing mainly on procurement/disbursements, revenues/receipts, and administration/reporting.

Each organization should constantly re-assess processes based on internal & external customers aiming to improve efficiency and maximise quality and customer satisfaction.

Defined and agreed (and supported by all finance personnel) month-end track lists can help continually assessing these steps.