Having clarified the scope of work and other project parameters, better practice entities develop a schedule for preparing financial statements. The schedule is an important tool as it outlines the main activities, events and project milestones—when they are planned to start and when they are due to be completed.
Among other benefits, the schedule will:
- help the team and senior executives to monitor progress and, if slippage occurs, develop strategies to bring the project back on track
- support workforce planning, to ensure enough appropriately qualified staff are available at peak times
- assist communication and engagement with stakeholders, by forecasting planned actions including when input from other areas is needed.
5.1 Scheduling tools and templates
The scheduling process does not need to be onerous and documentation does not need to be overly complex. Before preparing the schedule, it is helpful to clarify if the CFO or other senior officers have specific requirements for the level of documentation they require.
While specific programs for project scheduling are available, an effective schedule may be prepared using readily available software applications. If the entity has a project management framework, you may have access to a template for preparing the schedule.
5.1.1 Identifying activities and tasks
The schedule will include varying types of tasks, ranging from the updating of accounting policies to the completion of bank reconciliations. The following are key questions to guide the content included in the project schedule:
|Content to be included in the schedule
What must be done?
Actions to meet the requirements of legislative frameworks and stakeholders, and to prepare documentation.
How is it to be done?
Actions to enable the use of technology, input from internal and external parties and the frequency of communication.
Who is going to do it?
Internal and external resources and the responsible officers or business areas.
When is it to be done?
When financial statements must be prepared for review by various parties. When tasks should start and end for on time delivery. What are the key milestone dates? What are the dependencies?
How will risks be treated?
The risk treatment activities required and when these occur.
5.1.2 Identifying milestones and critical events
When developing the project schedule, it is useful to use last year’s schedule as the starting point, looking at when activities were planned and how long they actually took to complete. Last year’s activities and timelines can then be updated to take into account the prior year actual timeframes and any changes in current year internal and/or external reporting requirements.
Where there is no prior year project schedule, the financial statements team should start the process by making a list of project milestones and critical events, then build the list of activities, tasks, responsibilities and timeframes around these events. Working backwards from the most critical milestone date, which is generally the signing of the financial statements, is often an effective means of determining realistic timeframes.
The financial statements team should consider the sequence of critical events and then estimate the time required for each event, taking into account prior year experience and any interdependencies, for example, provision of information by shared services providers.
Entities should try to avoid being overly optimistic when estimating the time required for project activities. The largely sequential nature of the closing process means that an individual missed deadline can significantly delay the entire process and jeopardise the timeliness of the financial statements. Therefore, if possible, a buffer should be included in the schedule as a contingency for dealing with unplanned tasks or delays, such as unforeseen staff departures and/or leave, entity or service provider system failures.
5.1.3 Nominating responsible officers
The project schedule should be supported by instructions outlining relevant responsibilities, and the various requirements to be met during the process of preparing the financial statements. Where possible, the schedule should directly reference documents and provide details of where to find them.
Management should also commit sufficient resources to mitigate any risks associated with meeting the deadlines due to unexpected staff shortages. Where resources permit, entity’s should consider identifying and, where necessary training, staff from other teams to provide backup for key financial statements team staff if required.
5.1.4 Engaging with stakeholders in preparing the schedule
Increasingly, stakeholders involved in the financial statements will include other entities, such as shared services providers, from which data and information is required for inclusion in the financial statements. It is therefore important that the responsibilities of all these entities be included in the project schedule and details regarding required timeframes be communicated and agreed with them.
The draft schedule should be distributed to relevant parties for comment with the final schedule being agreed with the audit committee, and approved by the CFO. The final schedule should then be circulated to all stakeholders, including shared services providers and other entities that collect or pay money on behalf of the entity. To ensure all stakeholders fully understand and can meet key deliverables detailed instructions and/or briefings should be arranged.
5.1.5 Additional resources
This template contains:
(also see 4.2.6)
Example instructions for a team and business process.