Year-end checklist
Year-end closing checklist for Estonian companies: reconcile the bank, run depreciation, record dividends and review reports before the annual report.
The annual report is generated straight from your books, so its accuracy is decided long before you open the Annual Reports section. An hour of tidying now saves a puzzling validation error later — and the earlier a mistake is found, the smaller it tends to be.
Work through the list below once your financial year has ended. None of it is exotic; it's the ordinary bookkeeping, finished properly.
The checklist
The cash on your balance sheet comes from the ledger, not from your bank — so the two need to agree. Go through reconciliation and clear anything still unmatched at the year end. A few stray transactions during the year is normal; leaving them stray at year end is how a balance sheet parts company with reality.
Sales invoices unpaid at year end appear as receivables, unpaid purchase invoices as payables. Both are fine — that's what those lines are for — but a receivable nobody expects to collect doesn't belong on the report. Review what's outstanding and chase what's collectable.
Depreciation is recorded month by month, and the year is only complete once every month up to your year end has been run. Without them, your assets look newer and your profit larger than they really are. You don't have to hunt for gaps by hand: the annual report page lists every month still missing, asset by asset, and runs them in one click (see the year-end checks).
If money left the company as dividends, the books need to say so. Dividend payments change your equity and carry corporate income tax, so an unrecorded one quietly distorts both. The dividends page covers how they're recorded.
Finally, read the profit and loss and the balance sheet as a stranger would. Is revenue roughly what you expected? Does any line have a sign that makes no sense — negative cash, a balance for a loan you repaid? Odd numbers here become odd numbers in the annual report, where they're harder to chase down.
The year-end checks Arvello runs
Some year-end entries are adjustments rather than tidying, and Arvello works them out for you. Open the year in Reports → Annual Reports: until the report is prepared, its page shows a Year-end checks card, and Prepare Annual Report waits until each check is done. Every check has a one-step fix on that card. If a check stops passing after the report is prepared (say you add an employee who was employed at the year end), downloading the XBRL file and I've submitted it wait until it's done again. A report you've already downloaded has to be reopened for editing to show the card.
Depreciation. Every month the year owes, from each asset's in-service month to the year end, or to the month it's fully depreciated. A skipped October counts even if November and December were run. Months on or before your opening-balance date don't count, because the opening balances carry them. Months that can't be run any more show as a warning: an asset sold or written off after the year end, or one whose later months already used up its value. Their depreciation ends up in a later year instead.
Foreign-currency invoices. A sales or purchase invoice in another currency that was still unpaid on the last day of the year is revalued at the European Central Bank rate for that day, and the difference is booked as a currency gain (4300) or loss (6100). Arvello looks at the invoice as it stood on the year end: a payment dated in January doesn't count, so an invoice you were paid for in January is revalued even if you prepare the report in March. The entry is reversed on the first day of the next year, so the payment books as normal. If you record a payment or credit note dated in the old year after posting, the card asks you to post again, and only the difference is booked.
Unused annual leave. If anyone was employed on the last day of the year, Arvello asks about leave they've earned but not taken. That leave is a cost of the year it was earned in. Enter the gross holiday pay for all unused leave at the year end, including days carried over from earlier years that haven't expired (unused days × average daily pay). Unused leave carries over to the next year, but the claim to a year's leave expires one year after that year ends, so leave for 2024 can't be claimed after 2025 (TLS § 68 lg 5–6). The clock pauses while the employee is on maternity, paternity, adoption or parental leave, or in conscript or alternative service, so leave from those periods can still be owed; Arvello adds social tax and the employer's unemployment insurance, books the total as a liability on account 2290 on the last day of the year, and reverses it the next day. If there's none, click No unused leave. You can change the answer until the report is prepared, and only the difference is booked. Adding or changing an employee who was employed at the year end asks the question again.
Costs that belong to another year. A purchase posts on its delivery date when the supplier delivered first, else on its invoice date. December's rent invoiced on 3 January posts in December once it has its delivery date, but without one it would land in the new year, and next year's insurance invoiced in December lands in this one. Give a purchase that covers another year its service period (on the expense's page; see purchase invoices) and Arvello splits it by days at the year end: the part of a later invoice that covers this year is booked as accrued expenses (2300), and the part of this year's invoice that covers the next is moved to prepaid expenses (1300). An accrual for an invoice in another currency is carried at the ECB rate on the year end, because that is what the company owed then: the expense keeps the invoice's own euro amount, and the difference goes to exchange gains (4300) or losses (6100), as for any open foreign-currency invoice. A prepayment keeps the rate it was paid at. Both reverse on the first day of the next year, so the purchase itself stays on the day it posted. The card also lists purchases from the first 60 days after the year end that have no service period yet and weren't delivered in the year, as a reminder to check whether any of them covers December.
Finance leases. If you have a finance lease, the part of each lease's debt due within twelve months of the year end is a current liability and the rest long-term. Posting moves the current part to account 2420 on the last day of the year and back on the next.
Government grants. If you received a grant whose conditions you still had to meet (see reconciliation), it waits on account 2320 as a liability. Enter how much of it met its conditions during the year: that part becomes income (4100). Of what's left, enter the part whose conditions will only be met more than a year after the year end, so the balance sheet shows it as long-term (2330). Enter 0 if none. You can change the answer until the report is prepared.
Damaged or obsolete assets. The accounting standard (RTJ 5) asks you to check, at every year end, whether an asset is worth much less than its book value: damaged, out of use, replaced by something newer, or worth less on the market than its wear explains. The card lists every asset still on the register with its book value. Write down any that is to what it could be sold for or will still earn, then click I've checked every asset. An asset you've stopped using for good is disposed of instead.
Bank accounts in another currency are revalued together with the foreign-currency invoices, on the same card: the cash on each at the year end is valued at that day's ECB rate, and the difference from its euro value in the books is booked as a currency gain (4300) or loss (6100), reversed on the first day of the next year. An account with no foreign cash left but a euro remainder in the books (money bought at one rate and spent at another) is brought to zero.
Two more things happen without a click. Payroll is already booked in the month the work was done for: December's salary paid on 5 January is a December cost, even though it goes on January's TSD. And an overdrawn bank account appears on the annual report's balance sheet as a short-term loan rather than as negative cash, because the accounting standard (RTJ 2) doesn't allow an overdraft to be netted against your other bank balances unless the bank has a legal right to set them off.
When the list is done
That's the heavy lifting. From here, preparing the annual report is mostly Arvello's job: it assembles the statements from the books you've just tidied. And if something wrong surfaces later, the fix still happens here — correct the records, then recalculate the report.