Period-End Financial Analysis and Review

Field	Value
Owner	Unassigned — needs an owner
Department	General Accounting
Effective date	Not set in source
Scope	The period-end review performed by staff accountants and the additional checks performed by managers — balance sheet verification, income statement trend analysis, and balance sheet tie-out. Report selection is client-specific; the accounting manager specifies which reports to run for each client.
Source	`General Accounting/20 - Financial Analysis/Financial Analysis – Staff Accountants.docx` and `Financial Analysis - Manager.docx`

Period-end review runs in a specific order for a reason: verify the balance sheet before reviewing the income statement. A balance sheet account without support will produce income statement variances you can't explain.

Step 1 — Verify the balance sheet accounts

Before working on income statement review, run an account balance report or trial balance as a final check on the balance sheet accounts.

Account Balance report

Go to General Ledger → All → Account balances.
Run the report for the current month as of the period end date.
In the filters section, enter the first balance sheet account in from account and the last balance sheet account in to account.
Choose the entity you are reviewing in the location dropdown.
Click View.

Balance sheet accounts typically run from 1000 to 3999, or 10000 to 39999 — but this is unique by client. Confirm the range rather than assuming.

Trial Balance report

Go to General Ledger → All → Trial balance.
Run the report for the current month as of the period end date.
Choose the entity you are reviewing in the location dropdown.
Click View.

Every balance sheet account must have a worksheet that clearly supports and ties to the GL balance. Accounts that previously had no balance should be reviewed and have support added to the workbook — a new balance with no support is the most commonly missed item at close.

Step 2 — Review the income statement

Run a trend report. The accounting manager can tell you which specific reports to run for each client.

Export the report to Excel and save it as a tab in the period-close folder. As you review, make notes in the Excel file of corrections made and explanations for variances.

Start with the bottom line

Check net income and EBITDA (earnings before interest, taxes, depreciation, and amortization) for the period:

How does it compare to the same period in the prior year?
How does it compare to the last few periods?
How does current year-to-date compare to prior year-to-date?

Attempting to explain the change in net income and EBITDA first should guide the rest of the income statement review. It tells you which sections deserve attention.

Sales and revenue

How does the current period compare to the past few periods and the same period last year? Are there unusual spikes or drops needing explanation?
Are the usual items posted? If discounts are zero, were they not posted — or posted to the wrong GL account?

Cost of goods sold

Are COGS trending up, down, or flat?
Check for negative COGS lines. These indicate either a miscount of inventory or missing invoices that need to be accrued.
Compare current period COGS% to YTD COGS% and investigate large variances. Check for:
- Prior period invoices posting in the current period
- Large inventory adjustments
- More or fewer invoices than typically received in the period

Labor and benefits

Is labor as a percentage of sales trending up, down, or flat?
Are the typical items posted? If manager labor is always $7,500, why is it $2,500 this period?
Were payroll taxes, work comp, and health insurance expenses typical of the trend?

See Payroll concepts for how these expenses should be composed.

Operating expenses

Review GL accounts significantly higher or lower than prior periods. Accrue recurring invoices that may have been submitted after the period.
Review expenses that shouldn't change each month — rent, business insurance, depreciation/amortization, property tax.
For 12-period clients, check that invoices on a 12-period schedule have an expense in each period (for example utilities).
Review repair, maintenance, and equipment accounts for items over $2,500 that should be capitalized. See Fixed assets.
Check that cash over/short is reasonable.
Are expenses calculated as a percentage of sales correct — royalties, management fees, percentage rent?

Net income and EBITDA

Is net income/EBITDA as a percentage of sales trending up, down, or flat?
How do the observations from sales, COGS, labor, and operating expenses explain net income this period?

Step 3 — Tie out the balance sheet

Run a balance sheet report. The accounting manager can specify which report for each client.

Confirm both of these:

Do total assets and total liabilities/equity tie?
Does current year net income in the equity section tie to net income YTD on the income statement?

Expected outcome: every balance sheet account has supporting documentation that ties to the GL, the balance sheet balances, equity ties to the income statement, and every material variance has a written explanation in the trend workbook.

Manager-level checks

These are performed by accounting managers in addition to the staff review above.

To see how a vendor has been coded over a long period or across locations, run a bills analysis report and filter for that vendor. It returns the coding for all bills entered.

This is the fastest way to find a vendor that has been coded inconsistently between locations.

Review comps, promos, and discounts as a percentage of sales.

A higher than normal percentage can indicate fraud or a quality issue in the restaurant. Treat an unexplained increase as something to investigate, not a rounding difference.

Bank reconciliation concepts — must be complete before this review
Inventory and COGS — background on the COGS checks above
Fixed assets — the $2,500 capitalization threshold
Payroll concepts — labor and benefits composition
Project accounting — WIP and deferred revenue tie-out
Trend Example.xlsx — see Supporting materials