How to close the fiscal year
Sections in this article
- What to expect
- What to do before proceeding
- Suggested Reports
- How to close the year
- How to verify balances
- End-of-Year Check-List
What to expect
In the last fiscal month, instead of using the End-of-Month Process, complete the End-of-Year process. This process:
- moves the new budgets into place,
- closes the fiscal year to additional transactions, and
- sets the beginning balances of all accounts to their proper value for the beginning of the new year including zeroing out all Income and Expense accounts and transferring the difference to the designated Net Asset Account.
What to do before proceeding
Ensure that deposits, journal entries, and credit card charges dated in the last month of the fiscal year and bills that have been paid in the last month of the fiscal year are complete and accurate. Those transactions cannot be changed after the end-of-year process is run. In the Accrual Accounting method, unpaid bills dated in the prior fiscal year cannot be modified after the end-of-year process is run, if they have an invoice date that is in the prior fiscal year. In the Cash Accounting method, you can still edit unpaid bills after closing the year.
Since you can continue to enter bills, checks, deposits and journal entries for the first month of the next fiscal year, you should complete the last month's bank reconciliation prior to running end-of-year which helps to ensure all transactions have been entered correctly. Doing the bank reconciliation before processing end-of-year will also allow you to make any necessary corrections. If the bank reconciliation is done after the end-of-year process is run, correcting entries must be made as of the current accounting period.
Suggested Reports (End-of-Year Reports)
There are several reports you will need to print before running the end-of-year process:
- Deposit Register
- Journal Entry
- Check Register
- Bill List
- Statement of Activities
- Statement of Financial Position
- Dedicated Accounts,
- General Ledger
- any other reports requested by others in your church
Memorized Report Group
If you have not yet memorized all of the reports listed above during the end-of-month process, you can run each report individually and memorize them with the date selection of Current Month.
If you have already memorized these reports during the end-of-month process, you can simply preview the End of Month Reports group and print all of the reports at once.
The following reports should be printed at the End of Year:
- Statement of Financial Position for each fund (individually) and for all funds (collectively).
- Statement of Activities for each fund (individually) and for all funds (collectively).
- Statement of Dedicated Accounts for each fund (individually) and for all funds (collectively).
In addition, you may want to print the following optional reports:
- General Ledger for the entire year
- 1099-MISC (if necessary)
- Statement of Cash Flow
- Monthly Budget/History
- Vendor Audit for every vendor or just particular vendors
Once these reports have been printed, you are ready to perform the end-of-year process in ParishSOFT Accounting.
For more information on Memorized Reports, see our Memorized Reports FAQ's Help File.
How to close the year
To get started, click on the Process icon → End of Period Processing → End of Year link.
You will be presented with the following screen:
If the current month in ParishSOFT Accounting is not the last month of the fiscal year, you will see the following error when trying to run the end-of-year process:
This means that the current month in ParishSOFT Accounting is not the last month of your fiscal year. Please run the End-of-month process until you reach the last month of your fiscal year.
Once you are in the last month of your fiscal year, you should see the following screen when clicking on Process → End of Year:
Note: If you have an entity listed that you do not use and it has no Net Asset Account associated with it, you will see this message across the top of the screen:
Please read the help file titled: An Entity is listed that should not be. When using GAAP each entity HAS to have 3 Net Asset Accounts and each must be linked. There will be a Net Asset for each restriction type. Please read the help file titled: PSA GAAP Compliance - Accounts: How to set up net asset accounts
From the End of Year Screen (once any issues have been resolved), click the Submit button to close the current year and open the new year. Once the processing is complete, ParishSOFT Accounting will automatically take you back to the Ledger and Payables dashboard and will also change the current month and year to be the first month of the new fiscal year.
Net Asset Accounts
If you notice in this example, all 3 entities have Net Asset Accounts. Some of your entities may not have Net Asset Accounts listed and until you select the correct Net Asset Account for each entity, you will get an error when trying to run the end-of-year process. For these entities, simply click the Go button to the left of the entity. Then on the next screen, select the Net Asset account drop-down then the Net Asset account from the list. If there are no Net Asset accounts listed in the drop-down, you would need to go to your chart of accounts and either create a new Net Asset account for that particular entity or bring it in from your diocese chart of accounts.
Once the Net Asset account is selected from the drop-down, click Submit to save the changes to be taken back to the End of Year screen. Click the Submit button to process the end of the year.
How to verify balances
To verify that the end-of-year process completed successfully, print the following reports and compare the balances to the reports that you printed earlier:
Print the Statement of Financial Position for each and for all funds. NOTE: For Asset and Liability Accounts, verify that beginning balances are the same as the ending balances at the end of the last fiscal year.
Print the Statement of Activities. NOTE: For Income and Expense Accounts, verify that the account balances are zero or equal to the transactions entered for the new year and that the budget numbers are correct.
Print the Statement of Dedicated Accounts. NOTE: Verify that beginning balances are the same as ending balances at the end of last fiscal year.
- Verify the Net Asset Balance. The Net Asset will change by the net total of income minus expense. This can be found at the end of the Statement of Activities for the final month of your year. No Journal Entries will be created.
After you have verified that the reports are accurate, the End of Fiscal Year is now complete!
End of Fiscal Year Check List
- Ensure that deposits, journal entries, and credit card charges dated in the last month of the fiscal year and bills that have been paid in the last month of the fiscal year are complete and accurate.
- Complete the last month's Bank Reconciliation for the Current Fiscal Year
- Print End of Fiscal Year Reports such as Deposit Register, Journal Entry, Check Register, Bill List, Statement of Activities, Statement of Financial Position, Dedicated Accounts, and the General Ledger; as well as any other reports requested by others in your church.
- Note: Dedicated Account balances carry forward each year and do not update the Net Asset accounts, as do Income and Expense Accounts.