Understanding financial close
Financial close represents the conclusive phase in a fiscal period where a company finalizes all its monetary transactions, including payments, contracts, and the issuance of securities. Upon reaching this point, the company can prepare and release its financial statements.
Process of concluding financial transactions
The process of financial close involves crucial steps, such as finalizing financial statements, obtaining approvals from investors and lenders, executing transactions, and officially concluding all financial records and transactions.
Steps involved in concluding financial transactions
- Preparation and authorization of final financial statements.
- Auditors review the financial statements.
- Submission of audited financial statements to authorities.
- Receipt of regulatory approvals.
- Completion of accounting and financial records.
- Payment of taxes and statutory dues.
- Allocation of profits or losses to shareholders.
Individuals involved in financial close
The financial close process is primarily handled by a company's finance department. This department ensures all financial records are updated and compliant with regulations. It collects, analyzes, and compiles data from various departments, prepares financial reports for the board of directors, and finalizes the financial close upon their approval.