---
title: "Period-End Financial Analysis and Review"
sidebarTitle: "Financial analysis"
description: "The balance sheet verification and income statement trend review that closes a period, plus the manager-level checks layered on top."
icon: "chart-line"
---

> **For AI agents:** the complete documentation index is at [llms.txt](/llms.txt). Append `.md` to any page URL for its markdown version.

| 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.

<Tabs>
  <Tab title="Sage Intacct">
    **Account Balance report**

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

    <Note>
      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.
    </Note>

    **Trial Balance report**

    1. Go to **General Ledger → All → Trial balance**.
    2. Run the report for the current month as of the period end date.
    3. Choose the entity you are reviewing in the **location** dropdown.
    4. Click **View**.
  </Tab>

  <Tab title="Restaurant365">
    **Account Balance by Location**

    1. Go to **Reports → My reports → Accounting → Account balance by location**.
    2. Filter by legal entity, as of the period-end date.
    3. Choose the balance sheet accounts.
    4. Set location view to **number then name**, and **Show unapproved** to **No**.
    5. Click **Run**.

    **Trial Balance**

    1. Go to **Reports → Custom financial reports → Trial balance → Trial balance**.
    2. Click **Run**.
  </Tab>
</Tabs>

<Warning>
  **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.
</Warning>

## 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?

<Tip>
  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.
</Tip>

### 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](/internal/sops/accounting/payroll/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](/internal/sops/accounting/general/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:

1. **Do total assets and total liabilities/equity tie?**
2. **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.

<AccordionGroup>
  <Accordion title="Trace vendor coding across time and locations">
    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.
  </Accordion>
  <Accordion title="Review comps, promos, and discounts">
    Review comps, promos, and discounts as a percentage of sales.

    <Warning>
      **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.
    </Warning>
  </Accordion>
</AccordionGroup>

## Related documents

- [Bank reconciliation concepts](/internal/sops/accounting/general/bank-reconciliation-concepts) — must be complete before this review
- [Inventory and COGS](/internal/sops/accounting/general/inventory-and-cogs) — background on the COGS checks above
- [Fixed assets](/internal/sops/accounting/general/fixed-assets) — the $2,500 capitalization threshold
- [Payroll concepts](/internal/sops/accounting/payroll/payroll-concepts) — labor and benefits composition
- [Project accounting](/internal/sops/accounting/general/project-accounting) — WIP and deferred revenue tie-out
- `Trend Example.xlsx` — see [Supporting materials](/internal/sops/accounting/supporting-materials)