A dependable month-end close is a sequence, not a scramble. Each step should have a source, an owner, a completion date, and a documented exception path. The checklist below is a starting point that should be adapted to the firm’s entity structure, software, accounts, and professional advice.
1. Lock the period and collect source records
- Bank and credit-card statements
- Loan and line-of-credit statements
- Payroll reports and tax-payment confirmations
- Merchant-processing and payment-platform reports
- Practice-management billing and collection reports
- Settlement and case-cost support
- Prior-month open-item list
Use a clear cutoff date. Late information should either be posted through the controlled close process or placed on the open-item list, not quietly mixed into a later period without explanation.
2. Reconcile cash and cards
Reconcile each operating bank, savings, credit-card, and payment-clearing account to an external statement. Investigate duplicate bank-feed entries, uncategorized transfers, stale checks, deposits that do not match billing records, and personal or partner activity that needs proper treatment.
3. Review balance-sheet accounts
A profit-and-loss statement can look plausible while the balance sheet carries old errors. Review receivables and payment clearing, payroll liabilities, loans, fixed assets, owner or shareholder accounts, suspense balances, and any account with an unexplained negative or unchanged balance.
4. Review matter economics
Confirm that case costs and reimbursable expenses follow the firm’s chosen accounting treatment and can be traced to the correct matter where required. Review settlement-related entries against the source documents and make sure trust funds were not recorded as operating revenue.
5. Complete trust-account procedures separately
If the firm maintains a lawyer trust account, use its dedicated reconciliation and review procedure. A bank reconciliation alone does not establish agreement with the total of individual client ledgers.
6. Produce an open-item list
Every unresolved item should name the amount, date, account, question, person responsible, and next action. This keeps uncertainty visible and prevents the same item from being rediscovered month after month.
7. Prepare the reporting packet
A useful packet commonly includes a profit-and-loss statement with comparison, balance sheet, cash summary, selected matter-cost information, and the open-item list. The exact reports depend on the firm’s decisions and the advice of its tax professional.
8. Preserve the close
Save the final reports and reconciliations, document material entries, and restrict prior-period changes according to the firm’s controls. The IRS explains that an effective recordkeeping system should summarize business transactions in journals and ledgers and that electronic systems must provide a complete and accurate accessible record.