Record to report / R2R – General Accounting – Trial Balance

We shared the process of book closures  and the criticality behind it.

The next process is Trial Balance Preparation. You may be wondering why this is a process. Normally trial balances are drawn at the end of a fiscal period.

Trial Balance  is an important document. As the size of organizations grew, the practice of drawing of trial balances moved from annual to quarterly, to monthly, in some cases even fortnightly and weekly.

So is the process related to only extracting a trial balance at a defined periodicity and handing the same to the CFO personnel? The answer is NO.

The process involves drawing of the trial balance, comparing this with the previous period balances, identifying any unusual changes / balances, doing the spade work and documenting the unusual items with evidence and then handing the same over to the CFO group for analysis and directives.

If errors are identified, since the books are closed for the period, manual adjustments are effected before the financial statements are drawn. This is possible during the midst of the fiscal year, however at the year end, provisions are made that the final adjustment entries can be made before final closure.

Thus this sub-process becomes the raw material for financial analysis, which is so critical to businesses.



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