Month-End & Reporting

Year-End AR Checklist

Year-end accounts receivable goes beyond a normal close: it sets the receivables figure in your annual accounts, finalises the provision and prepares for audit. This checklist covers the extra steps a year-end demands.

What this checklist covers

  • Complete a rigorous year-end AR close and reconciliation
  • Finalise the bad-debt provision and write-offs for the year
  • Confirm cut-off so revenue and AR land in the right year
  • Prepare AR fully for the annual audit
  • Set up clean opening balances for the new year

8 min

Before you start

Year-end carries more weight than a monthly close, so allow more time and tighter review. Make sure the routine close is solid before you layer the year-end steps on top.

  • Complete a normal month-end close first — cash applied, sub-ledger tied to GL.
  • Agree the year-end timetable and any auditor deadlines.
  • Gather the full year's write-off, credit and provision history.
  • Note that year-end accounting and tax treatment differ — this is general information, so confirm both with your accountant.

Step 1 — Close and reconcile rigorously

  1. Run the full month-end AR close and reconcile the sub-ledger to the GL control account.
  2. Resolve every reconciling item — year-end is not the time to carry unexplained differences.
  3. Confirm intercompany balances are agreed if related entities are in scope.
  4. Lock the period once the reconciliation is signed.

Step 2 — Finalise valuation and cut-off

  1. Review and finalise the bad-debt provision against the year-end aged trial balance.
  2. Process approved write-offs for the year, with evidence and sign-off.
  3. Test cut-off carefully so invoices and receipts fall in the correct financial year.
  4. Check subsequent receipts after year-end as evidence that balances are recoverable.

Step 3 — Audit prep and new-year opening

  1. Assemble the AR audit pack — reconciliation, aged analysis, provision workings and approvals.
  2. Prepare for customer balance confirmations if the auditor requests them.
  3. Confirm the closing AR becomes a clean opening balance for the new year.
  4. Carry forward only genuine, supported balances — not stale clutter.

Year-end is the right moment to deal decisively with long-aged debt. A free debt appraisal helps you decide what to pursue versus provide for, and issuing a credit note is the correct route for amounts that were never owed.

Common mistakes

  • Carrying reconciling items into year-end. Unexplained differences become audit findings.
  • A stale provision. A provision not refreshed against the year-end aged report misstates AR.
  • Loose cut-off. Revenue in the wrong year is one of the most common — and visible — errors.
  • Dirty opening balances. Stale clutter carried into the new year starts the next twelve months wrong.

Key takeaways

  • Year-end demands a rigorous close with every reconciling item resolved
  • Finalise the provision and write-offs against the year-end aged report
  • Test cut-off carefully so revenue and AR land in the right financial year
  • Carry forward only clean, supported balances as opening positions

Frequently asked questions

How is a year-end AR close different from a monthly one?

It carries more weight and scrutiny. You resolve every reconciling item rather than carrying any forward, finalise the bad-debt provision and write-offs for the year, test cut-off rigorously, and prepare a full pack for audit. The closing balance also becomes the audited opening balance for the new year, so accuracy is paramount.

Why is cut-off so important at year-end?

Because it determines which financial year a sale and its receivable belong to. An invoice recorded in the wrong year misstates both revenue and AR across two periods and is one of the first things an auditor tests. Careful cut-off keeps your annual accounts and tax position correct.

Should I get tax advice on year-end write-offs and provisions?

Yes. The accounting treatment of a provision differs from a write-off, and the tax deductibility and GST treatment of bad debts have specific rules and timing in Australia. This checklist is general information only — confirm the treatment with your accountant or registered tax agent before finalising.

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