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Month-end checklist (non-Enterprise)

The month-end close process is the most common and frequent accounting process our clients will undergo. It allows accountants to verify that all financial activity is; complete and accurately recorded (a theme you will see repeated many times throughout this document), correctly categorized, reconciled, and any discrepancies identified are resolved. It is a crucial step in the accounting process to ensure the reliability and integrity of the financial data is maintained. Let's take a look at the steps generally involved in this process for accountants.

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For customers with no Audit-readiness module, there is no one Controls and Risk management module to rely on, but customers can use our powerful Needs Review tabs and reports to complete the month-end process. We have prepared a high-level checklist to help you through it.

 

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If you haven’t registered, it will only take 2 mins and use the link here.

 

Table of content

Step 1 Data completeness - all my sources are in

Step 2 Data accuracy - all my sources are correct

Step 3 CoA accuracy - all my labels, categorized

Step 4 Generating reports

Step 5 Period locking and impairment [If applicable]

Step 6 Syncing to ERP

Step 7 Compare ERP data with Cryptio data

Step 8 Save documentation

 

Step 1 Data completeness

a) Review and verify workspace data is complete, this includes:

  • In this step, every company should ensure on a monthly basis that all wallets, exchange accounts, and custody accounts are fully imported into their Cryptio workspace. This is crucial as missing sources will result in an incomplete reconciliation and unreliable data as a result.
  • Then generate and review the Source List report to make sure there are no asset changes between the two periods.

💡 The best practice policy is to keep an internal list of all sources of income used by the company as well as the date they were added. Using the date as a reference point, this should be checked against their Cryptio workspace to ensure completeness each month.

 

b) Make sure all internal transfer contacts are updated, including vendor contacts.

  • Generally, most disposals are seen as a gain-triggering event with the exception of internal transfers. In order to identify which transactions are classified as such, all on-chain addresses controlled by the company need to be flagged in Cryptio. Failure to provide a complete list of these addresses will result in an overstatement of gains and as a result, higher tax bills. This has not only data consequences but also financial ones.
  • In the left-side navigation bar, navigate to Business > Unidentified Addresses and identify the addresses with a recognizable name. 

💡 We recommend keeping an internal list of all controlled source addresses as a policy. This documentation will be referred to on a monthly basis against Cryptio’s list for potential new additions.

 

Step 2 Data accuracy

a) Resolve missing prices or volumes.

  • Due to the technical nature of protocols and on-chain assets that drive crypto accounting, there are extremely unique challenges that arise. Missing volumes and prices are two such issues. These usually occur when the product is unable to apply standard pricing methods and asset volume reconciliations to certain transaction types. There are a whole host of reasons why these may occur and we recommend working with your account manager to help identify the root causes and solutions necessary. This is another critical area as transactions that are missing either will not be able to sync directly to your ERP software due to the missing data.
  • Simply navigate to the Transactions page > Needs review and find the Missing prices and Missing volumes tab. Then you can see all the transactions that have missing prices or volumes associated with them.

💡 One recommendation to reduce the stress of completing this at month's end is to perform this task on a weekly basis. As transactions occur throughout the period, companies will have the ability to reconcile missing volumes and prices on any given day.

 

b) Investigate and resolve discrepancies - between recorded transactions, reports, and their supporting documents.

  • For example, compare Coinbase account balance with Cryptio’s balance.
  • Or look into asset balances, compare to asset roll-forward, or use the Dashboard under the Treasury module.

 

Step 3 CoA accuracy

a) Review and verify transaction categorization and labels.

  • Make sure all transactions for the current month are all labeled and labeled correctly.
  • Simply navigate to the Transactions page > Needs review and find the Transactions without label tab. Then you can see all the transactions that have no labels associated with them.

b) Similar to traditional accounting, each company should set up an account to reflect each part of its business operation. These accounts will drive how raw transaction data is categorized and flow into the various financial statements (balance sheet, income statement). There are 5 main types that crypto activity will fall under:

  1. Assets
  2. Liabilities
  3. Equity
  4. Revenue
  5. Expenses

These should mirror the chart of accounts mapping in their main ERP accounting software if one is present. When transactions are synced, this will ensure data flows correctly. In traditional accounting, there is a 5th type of account that belongs to equity. As the industry evolves, this will likely play a part.

  • Navigate to the Transactions page > Needs review and find the Incomplete CoA tab. Then you can see all the transactions that have missing CoA mapping.

💡 The best practice policy here is to keep the starting numbers for each account type the same.

  1. Assets: 10000 - 19999
  2. Liabilities: 20000 - 29999
  3. Equity: 30000 - 39999
  4. Revenue: 40000 - 49999
  5. Expenses: 50000 - 59999

This will give your accounting data a cohesive structure as you expand operations further and grow your business over time. Each account should be uniquely numbered as well.

 

Step 4 Generating the End of-month reconciliation report

  • Our End-of-month reconciliation report encompasses all the relevant reports you need in one click: Ledger entries, asset roll forward, trial balance, and transaction history report.
  • For tips and tricks, check out our article here.

💡 Examples to look out for:

  • Asset roll forward from period to period matches with all the transactions in that period.
  • Ledger entries align with transactions that you want to sync into ERP.

Step 5 Period locking and impairment [If applicable]

  • Lock your period by following the steps in the Locking Data article.
  • [Add-on for Pro] Navigate to the Impairment module and get all the updated balances and generate an impairment balance report. For detailed impairment module guidance check out the resource here.

 

Step 6 Syncing to ERP

  • Prepare journal entries - Create journal entries that summarize all reconciled activity within the period, including adjustment entries if necessary in the general ledger. This will be synced directly to the client’s ERP software.
  • For ERP-specific syncing, scroll to the bottom of the User Guide and select the relevant software for you.
  • Navigate to the Transactions page > Needs review and find the Ready to be synced tab. Then you can see all the transactions that are ready to be pushed as journal entries.

💡 For non-ERP users, generate the Ledger entries report.

 

Step 7 Compare ERP data with Cryptio data

  • Reconcile sub-ledgers and trial balance - Ensure that sub-ledgers and trial balance are in agreement by comparing account balances.

💡 Users can use the trial balance from the End of month reconciliation report to complete the comparison.

 

Step 8 Save documentation

  • Prepare financial reports for management review - Generate financial reports, such as trial balance income statement, and cash flow statement, to provide insights into the company's financial performance.

This concludes the monthly process to ensure data completeness during your reconciliation. Again to note, this should always be completed prior to reviewing data accuracy. An accurate but incomplete data set is still unreliable and can lead to significant financial harm over an extended period of time.