Finance and Bookkeeping - Session 12

The Monthly Finance Review

Prepare a monthly finance packet that explains results, open questions and decisions. Use the same packet together, with the admin manager owning bookkeeping and reporting and the CEO leading forecasts and major decisions.

The MSP finance task

The monthly reports are ready, but the CEO needs to know why profit changed and which payments or decisions need attention. A checked packet connects the accounting results to specific explanations, unresolved records and proposed next steps.

Shared finance packet

The admin manager prepares bookkeeping and reports. The CEO leads forecasts and major decisions. Both use the same statements, explanations and action register.

Close status

The monthly close checks and completes accounting records. Label reports draft, ready for review or approved under the company's process. Calendar completion alone does not establish close approval.

Packet contents

Include the profit and loss statement, balance sheet, aging, commitments, scorecard and cash forecast. Show report dates, sources and unresolved matters.

Variance explanation

A variance compares actual results with a stated plan or prior period. Separate the measured difference from the cause that supporting records must establish.

August to September

Supplied figures: revenue +$20,894.53; direct costs +$27,091.77; overhead +$2,005.78. Operating income falls $8,203.02. Close approval and causes remain unconfirmed.

Cash questions

Reported bank balances need reconciliations and dated commitments. Receivables need aging and expected collection dates. A balance alone does not establish available cash.

Decision requests

A decision request states the proposed action, evidence, cash requirement and conditions. The admin manager prepares inputs; the CEO approves the business decision.

Action register

Record the task, responsible person, required evidence and agreed follow-up date. Preserve report versions when corrections change a reviewed result.

A month has ended, but the bank reconciliation and payroll review remain open. How should the packet describe the reports?

  1. Approved because the calendar month has ended
  2. Draft with specific open checks
  3. Final if total assets equal liabilities plus equity
  4. Complete because the bank balance is positive

Revenue rises by $5,000, direct costs rise by $7,000 and overhead is unchanged. What happens to operating profit?

  1. It increases by $5,000
  2. It increases by $2,000 after subtracting costs
  3. It decreases by $7,000 while revenue is unchanged
  4. It decreases by $2,000

The payroll-cost account increased. Which statement belongs in the initial finance explanation?

  1. Payroll cost rose; the payroll register is needed to explain why
  2. A new employee caused the full increase
  3. The company must reduce its delivery team immediately
  4. Employee pay rates increased by the reported account difference

Key terms

Monthly finance review
A regular review of financial records, upcoming payments and business decisions.
Finance packet
A collection of reports and explanations prepared for a finance review.
Monthly close
The process of checking and completing accounting records for a reporting period.
Reconciliation
A comparison of records that identifies and resolves differences.

Three points to remember

  1. Show reporting dates and close status in the shared packet.
  2. Explain measured changes before proposing their causes.
  3. Record decisions and specific follow-up tasks.