Accounting Month-End Close Process Manufacturing Plant

Matt Atilano
Written Description:
Once the current month ends, the first thing that is done is that the Controller of the
manufacturing plant, or someone on the IT staff, freezes the enterprise management system, which
restricts employees outside of accounting from accessing the system. Point-in-time reports are then run,
which include: inventory reports, accounts receivable reports, accounts payable reports, among other
reports that are used by the particular plant. The accounts receivable staff then works to complete
invoices for all units that were shipped prior to month end and meet the revenue recognition criteria
used by the facility. If there have been large inventory reconciliation issues in the past, a physical
inventory count is conducted by the accounting staff. This count is then reconciled to the inventory onhand report which is pulled from the enterprise management system. Any necessary correcting journal
entries are then booked. All other necessary journal entries not related to the inventory reconciliation
are prepared and booked as well. After that happens, the Controller or Accounting Manager reviews the
journal entries for accuracy and completeness. If there is an error the journal entry is sent back to the
preparer for correction, before then again being reviewed by the Controller or Accounting Manager.
After the journal entries are approved, they are finalized. This cycle repeats until all journal entries have
been completed. Once all journal entries have been completed, the monthly financial statements are
prepared and finalized. Finally access to the enterprise management system is restored for all users,
which signals the end of the monthly accounting-close cycle.
Reflection:
There are a few main differences between my written description and the flow chart. In my eyes
the flow chart is a much more concise way of communicating the process to a user. However, the
written description provides more detail, which is necessary for users that dont have a background in
the subject matter, which in this case is accounting, and more specifically, accounting close at a
manufacturing facility, which can vary greatly in itself. I feel that the flow chart should be followed by
the written description in order to ensure that the process is accurately interpreted by the reader.
The actual creation of the flow chart wasnt too bad in itself since I have created various flow
charts for work in the past. During my time working in accounting at a manufacturing facility, I was
tasked with creating a flow chart of the order to delivery process of the specific business; which in this
case was concrete mixers. This required collaborating with people from all different areas of the
business: from accounting to sales to purchasing to manufacturing,

Current
Month
Ends

Controller or IT freezes
enterprise
management system.

Reconcile physical inventory

counts to inventory on-hand
per enterprise system.

Units shipped prior

to month end are
invoiced.

Point-in-time
reports are run by
accounting team.

Perform physical
inventory of items
on-site.

Yes

Have there
been large
inventory
reconciliation
issues in the
past?

No

Book journal
entries as needed
to close books.

No, then JE preparer corrects

Entry
correct?

Controller/Acctg
Manager reviews
prepared journal
entries.

Yes
No
Entry is finalized.

All entries
complete
?

Yes
Month-End Close
Complete

Enterprise system
access is restored

Monthly financial
statements are created.