Action to be taken before Closure of Books of Accounts as on 31st March, 2024

Closure of books of accounts seems like essential moment for enterprises, importance of the financial performances for a particular period. As we are closed to books for the fiscal year ending on 31st March, 2024. It becomes imperative for companies to take strategic actions to ensure compliance, accuracy, and a clear financial. In this article, we are reconciling accounts to examine revenue identification, need to take significance enterprises must take before finalizing their financial records. 

What do you mean by books of accounts?

The concept of books of accounts means the records maintained by organizations or enterprises to systematically involve certain details of financial year like expenses, liabilities & assets, equity over a year, and income. The motive of managing books of accounts is to appropriately track and document all financial operations done by the business. 

Maintaining appropriate books of accounts is significant for management of finance, decision making, compliances of tax and regulatory reporting. It gives a transparent view about the business activities, liquidity, financial health, solvency, and able to provide assess profitability to shareholders. Furthermore, proper keeping of books offers the financial statements preparation like balance sheet, income statement and statement of cash flows. These are significant for external evaluation and reporting.

Closure of books of accounts year end

For the systematic analysis and maintenance of books of accounts under Companies Act, 2013, need to make sure about the completeness in all sense of books of accounts. Here are certain requirements to be fulfilled while reviewing books of accounts. These essential activities for 2024-year end closing of books will be implement the provision of section 43B(h) of the Income Tax Act, 1961:

• Closure of Books of accounts need to be updated fairly and truly, and must be no changes in accounts.
• Have a column for entries for provision.
• Review all compliances and verify that those are compiled under provisions of the Companies Act, 2013, generally with GST authorities and income tax. 
• Appropriate identification of income.
• Passing of all transactions at the end date of the financial year such as receipts, sales, payments, and purchases. 
• Evaluate fixed asset and reconcile them with physical assets to make sure the relevancy and dispose of the assets, which will no longer be useful.
• Third party consent to make sure balances agree with your books.
• Clear identification of revenue. 
• Passing of accrual entries deferred entries for revenue and expenses.
• Inventory valuation by doing the physical count and adjusting the inventory value after looking their market value.
• Passing the non-cash expenses (amortization, depreciation etc.)

Tasks before closure of books of accounts

Here are certain significant tasks need to be accomplished before year end closing of books:

• Collection of TCS on sales invoices wherever TCS is applicable;
• All payment must be cleared to supplier according to section 43B(h) of the Income Tax Act. 
• Whether ITC is reversed or not and creditors for more than 180 days.
• Collected money from debtors on due dates and mentioned in your records appropriately.
• Are sales invoices received in relation to advance payment.
• Is tax deducted on salary, purchases and other expenses wherever the TDS is applicable.
• Bank accounts must be reconciled.
• All the purchases that are for the enterprises aims are reflected in the accounts and its reconciliation has done.
• In case buyer not paid the amount on time, whether you have put interest to buyers according to provisions of MSMED Act (in case applicable).
• If applicable, the IGST under RCM appropriately recorded against import of goods.
• The compliances must be done as per current financial year provisions. 
• In case of bad debts then create a plan and take relevant action, that how amount can be taken.
• Is there any refund or demand received as per the year adjustment has been done. 
• In case creditors payment done after 180 days, then reversed ITC considered back or not.
• Are you eligible for any subsidy, in case of yes, then check is it claimed or not. 
• Look into the audit trail provisions that are applied to all companies, especially those are registered under the Companies Act, 2013. 
• Recheck salary framework with return submitted with several departments (ESI, PF etc). 

Final Words

In conclusion, we can say that by all compliances of closure of books of accounts for the financial year ending 31st March, 2024. It is quite evident that the attention must be on details and adherence to best practices. By thoroughly reconciling accounts, adjust for increments, and deferrals, and most important to make sure about the compliances with accounting standards, companies can present appropriate financial statements, which reflect their true financial activities and positions. Furthermore, by involving in planned budgeting and proactive tax planning, enterprises can optimize their financial results and lay a solid foundation for success in the upcoming financial year. By taking essential steps before closure of books of accounts, enterprises cannot only meet regulatory needs but also gain invaluable insights to have firmed decision and for future enhancement.