Year-end closing¶

Year-end closing is vital for maintaining financial accuracy, complying with regulations, making informed decisions, and ensuring transparency in reporting.

Fiscal years¶

By default, the fiscal year is set to last 12 months and end on December 31st. However, its duration and end date can vary due to cultural, administrative, and economic considerations.

To modify these values, go to Accounting ‣ Configuration ‣ Settings. Under the Fiscal Periods section, change the Last Day field if necessary.

If the period lasts more than or less than 12 months, enable Fiscal Years and Save. Go back to the Fiscal Periods section and click ➜ Fiscal Years. From there, click Create, give it a Name, and both a Start Date and End Date.

Year-end checklist¶

Before closure¶

Before closing a fiscal year, ensure first everything is accurate and up-to-date:

• Make sure all bank accounts are fully reconciled up to year-end, and confirm that the ending book balances match the bank statement balances.

• Verify that all customer invoices have been entered and approved and that there are no draft invoices.

• Confirm that all vendor bills have been entered and agreed upon.

• Validate all expenses, ensuring their accuracy.

• Corroborate that all received payments have been encoded and recorded accurately.

• Close all suspense accounts.

• Book all depreciation and deferred revenue entries.

Closing a fiscal year¶

Then, to close the fiscal year:

• Run a tax report, and verify that all tax information is correct.

• Reconcile all accounts on the balance sheet:

  • Update the bank balances in Odoo according to the actual balances found on the bank statements.

  • Reconcile all transactions in the cash and bank accounts by running the aged receivables and aged payables reports.

  • Audit all accounts, being sure to fully understand all transactions and their nature, making sure to include loans and fixed assets.

  • Optionally, run payments matching to validate any open vendor bills and customer invoices with their payments. While this step is optional, it could assist the year-end closing process if all outstanding payments and invoices are reconciled, potentially finding errors or mistakes in the system.

Next, the accountant likely verifies balance sheet items and book entries for:

• year-end manual adjustments,

• work in progress,

• depreciation journal entries,

• loans,

• tax adjustments,

• etc.

If the accountant is going through the year-end audit, they may want to have paper copies of all balance sheet items (such as loans, bank accounts, prepayments, sales tax statements, etc.) to compare these with the balances in Odoo.

Current year’s earnings¶

Odoo uses a unique account type called current year’s earnings to display the amount difference between the income and expenses accounts.

To allocate the current year’s earnings, create a miscellaneous entry to book them to any equity account. Once done, confirm whether or not the current year’s earnings in the balance sheet is correctly reporting a balance of zero. If that is the case, set an All Users Lock Date to the last day of the fiscal year by going to Accounting ‣ Accounting ‣ Lock Dates.