Closing the books for the July–June financial year: a year-end checklist

Most Bangladeshi businesses run their accounts on a July to June financial year, matching the government fiscal year. That means the year-end close lands on 30 June, just as Eid bonuses, budget-related announcements and customer payment rushes tend to arrive. Without a plan, the audit starts with a trial balance nobody trusts and weeks of back and forth.

This checklist is for the person who actually has to close: the accountant, finance manager or owner-operator. It is about getting the books right, not about tax computation, which depends on your adviser and the current law.

Choosing and fixing your financial year

For most businesses, July to June is the default and the sensible choice, since it aligns with budgets, banks and the tax year. Some companies, especially subsidiaries of foreign groups, follow a different year-end such as December. If that applies to you, any change in year-end needs to be agreed with your auditor and handled according to current rules, so ask before changing it. Whichever you use, define it once in your accounting system so every report and period lock follows the same dates.

Start the close early: June is not the time to find problems

Treat the last quarter as rehearsal. If you do a clean month-end every month, the year-end is one more month-end plus a short list of annual items. If you leave bank reconciliations and stock differences for the audit, they will all land at once.

The year-end checklist

1. Cut-off: the right transactions in the right year

• Sales invoices dated up to 30 June, with goods delivered by that date, are in this year. Goods delivered in July belong to next year even if invoiced early
• Supplier bills for goods and services received by 30 June are recorded, even if the bill arrives in July (accrue them)
• Credit notes and returns processed in early July that relate to June sales are reviewed
• Imports in transit: understand who owns the goods at year end under the terms of shipment, and treat LC margin and advance payments accordingly

2. Bank, cash and wallet balances

Reconcile every bank account, cash box and mobile wallet to 30 June and keep the reconciliation signed. Uncleared cheques and deposits in transit should be listed, not buried. Obtain bank confirmations or statements for the year-end date. Post-dated cheques received but not yet deposited are not cash.

3. Receivables

Run the receivables aging at 30 June and review every balance older than your normal terms. Decide, with the owner, which balances are doubtful. Your auditor will ask what evidence supports the amounts you consider recoverable, such as later receipts, signed confirmations and correspondence. Match advance receipts and unapplied payments to invoices so that gross figures are not inflated.

4. Inventory

A physical count at or close to year end is the single most valuable control for a trading or manufacturing business. Count, compare with the system, investigate differences, and post adjustments before the books close. Check that valuation follows a consistent method and that slow-moving or damaged items are valued at the lower of cost and what you can realistically sell them for.

5. Payables and accruals

• Reconcile supplier statements for your top suppliers to your payables ledger
• Accrue expenses incurred but not billed: utilities, rent, interest, professional fees, freight, commissions
• Review advances paid to suppliers and unapplied debit balances
• Record tax deducted at source that has not yet been deposited as a liability

6. Fixed assets and depreciation

Update the fixed asset register: additions, disposals, assets fully depreciated but still in use, and assets no longer physically present. Run the year's depreciation under your stated policy. Keep in mind that accounting depreciation and the depreciation allowed for tax can differ, and your adviser will handle the tax side.

7. VAT, source tax and statutory balances

Reconcile the VAT ledgers to the filed Mushak-9.1 returns for the twelve months. Check that VAT and tax deducted at source liabilities in the ledger agree with what has been deposited and what is outstanding. Unexplained differences here are common audit queries.

8. Loans, equity and related parties

Agree loan balances to lender statements, accrue interest to 30 June, and check classification between current and non-current. Reconcile owner and director current accounts and any related-party balances, since these attract attention.

Lock the period and produce the reports

1. 1Run the trial balance and clear suspense and unallocated balances to zero or to a documented explanation.
2. 2Post adjusting journals with a reference and a short note on why, so the auditor can follow them.
3. 3Lock the closed months so no one can post into them without authority. Late changes go through a controlled reopening.
4. 4Produce the profit and loss statement, balance sheet and cash flow, and compare them with last year and with budget.
5. 5Review the unusual movements before the auditor does: any line that moved by a large percentage needs an explanation ready.

Opening the new year

After the audit adjustments are posted, check that opening balances in the new year equal the audited closing balances, that the retained earnings roll-forward is right, and that new-year documents use fresh numbering if your policy is to restart sequences each year. Then set a calendar of monthly close dates for the new year so that next June is easier than this one.