Monthly Accounting Close Checklist for UAE Businesses

A monthly accounting close is the structured process through which a business confirms that all financial transactions for a particular month have been recorded, reconciled, reviewed and reported correctly.

For UAE businesses, the monthly close is no longer just an internal bookkeeping exercise. Reliable monthly accounts provide the foundation for:

1. VAT Return preparation.
2. UAE Corporate Tax calculations.
3. Statutory and external audits.
4. Free zone and regulatory reporting.
5. Cash-flow management.
6. Bank and investor reporting.
7. Management decision-making.
8. UAE electronic invoicing readiness.

A business that delays its accounting until the end of the VAT quarter or financial year may discover missing invoices, unreconciled bank balances, unsupported expenses, incorrect VAT treatment and unrecorded liabilities when the correction window is already limited. A well-controlled monthly close allows these issues to be identified while the transactions are still recent and supporting information remains available.

This guide provides a practical monthly accounting close checklist for UAE mainland companies, free zone entities, branches, professional firms and growing small and medium-sized businesses.

What is a monthly accounting close?

A monthly accounting close is the process of finalising the accounting records for a completed month. It normally includes:

1. Recording all outstanding transactions.
2. Confirming that revenue and expenses are recognised in the correct period.
3. Reconciling bank, customer, supplier, tax and other balance-sheet accounts.
4. Recording accruals, prepayments, depreciation and other month-end adjustments.
5. Reviewing the trial balance and financial statements.
6. Investigating unusual balances and significant movements.
7. Preparing management accounts and financial commentary.
8. Approving and locking the completed accounting period.

The objective is not simply to complete data entry. The objective is to produce financial information that is:

1. Complete.
2. Accurate.
3. Properly classified.
4. Supported by documentation.
5. Consistent with the applicable accounting framework.
6. Useful for management decisions.
7. Capable of supporting tax filings and an external audit.

Why is the monthly close important for UAE businesses?

The UAE Commercial Companies Law requires companies within its scope to maintain accounting records that provide a clear picture of their financial position. These records must generally be retained for at least five years after the end of the relevant financial year.

For UAE Corporate Tax purposes, accounting net profit or loss is generally the starting point for calculating Taxable Income. Taxable Persons and relevant Exempt Persons must generally retain supporting records for at least seven years after the end of the relevant Tax Period. VAT-registered businesses must file their VAT Returns and settle the related VAT payment within 28 days after the end of their applicable Tax Period.

A monthly close helps ensure that the same underlying records can support:

1. Management accounts.
2. VAT Returns.
3. Corporate Tax calculations.
4. Audited financial statements.
5. Free zone reporting.
6. Bank and investor requirements.

Monthly close, VAT close and year-end close

These processes are connected, but they are not identical. The monthly close finalises the general ledger, reconciles material balances and produces monthly financial reports. The VAT close reviews transactions from a VAT perspective and reconciles the accounting records to the VAT Return — a business filing VAT quarterly should still complete VAT checks every month rather than waiting until the end of the three-month Tax Period.

The year-end close includes the monthly close procedures together with additional work such as:

1. Annual impairment assessments.
2. Full inventory counts.
3. Final Corporate Tax calculations.
4. External audit schedules.
5. Going-concern assessments.
6. Financial statement disclosures.
7. Annual management estimates.
8. Shareholder and board approvals.

A reliable year-end close normally depends on the earlier monthly closes having been completed properly.

Recommended month-end closing timetable

Many UAE SMEs should aim to complete their monthly close within seven to ten business days after month-end. A more developed finance department may close within three to five business days, while a larger or more complex group may require a longer but formally controlled timetable.

The closing calendar should clearly identify:

1. Each required task.
2. The responsible preparer.
3. The responsible reviewer.
4. The completion deadline.
5. Required supporting documents.
6. Outstanding issues.
7. Final approval status.

1. Establish ownership of the close

The company should formally assign responsibility for every part of the close. The closing calendar should identify:

1. Overall close owner.
2. Preparers for each account or process.
3. Reviewers and approval levels.
4. Submission deadlines.
5. Materiality thresholds.
6. Required supporting schedules.
7. Escalation procedures.
8. Period-lock date.

Where the business is large enough, the same person should not prepare, approve and post every significant transaction. For example:

1. The accountant prepares the bank reconciliation.
2. The finance manager reviews it.
3. An authorised signatory reviews unusual or high-value payments.

The reviewer should not merely sign the reconciliation — they should challenge unexplained items, old balances, unsupported adjustments and unusual movements.

2. Collect all source documents

The accounting team should confirm that documents relating to the month have been received and recorded. These may include:

1. Customer invoices.
2. Supplier invoices.
3. Credit notes.
4. Debit notes.
5. Expense claims.
6. Petty-cash vouchers.
7. Bank statements.
8. Credit-card statements.
9. Customs declarations.
10. Payroll reports.
11. Loan statements.
12. Lease invoices.
13. Utility bills.
14. Inventory receipt documents.
15. Delivery notes.
16. Service-completion certificates.
17. Contracts and purchase orders.

A missing supplier invoice does not necessarily mean that no expense exists. Where goods or services were received before month-end but the invoice has not yet arrived, the company may need to record an accrual or goods-received-not-invoiced liability. The finance team should maintain a pending-document register showing:

1. Missing document.
2. Supplier or employee responsible.
3. Transaction amount.
4. Relevant month.
5. Follow-up date.
6. Expected resolution.

3. Review sales completeness and revenue cut-off

Revenue should be recognised in the period in which it is earned under the applicable accounting framework — not simply when cash is received or an invoice is issued. The month-end revenue review should cover:

1. Completeness of invoice numbering.
2. Sales recorded immediately before and after month-end.
3. Delivery notes.
4. Service-completion evidence.
5. Unbilled revenue.
6. Customer advances.
7. Deferred revenue.
8. Credit notes issued after month-end.
9. Sales returns.
10. Retentions.
11. Contract variations.
12. Commission arrangements.
13. Principal-versus-agent considerations.

Example — unbilled professional services: a consultancy completes AED 40,000 of work during July but issues the invoice in August. Subject to the contractual terms and applicable accounting policy, the company may need to recognise the revenue and an unbilled receivable in July.

Example — advance received from a customer: a customer pays AED 60,000 in July for services to be provided over the following six months. The receipt should not automatically be recognised as July revenue; the company should determine how much has been earned and how much should remain recorded as deferred income or a contract liability. The revenue review should also consider the VAT date of supply, as accounting revenue recognition and the VAT tax point may not always fall in the same month.

4. Reconcile sales to VAT records

VAT-registered businesses should reconcile sales and output VAT every month, even when their VAT Returns are filed quarterly. The reconciliation should compare:

1. Revenue in the general ledger.
2. Sales recorded in the invoicing system.
3. Standard-rated supplies.
4. Zero-rated supplies.
5. Exempt supplies.
6. Out-of-scope transactions.
7. Customer advances.
8. Output VAT control account.
9. Credit notes.
10. Reverse-charge transactions.
11. Supplies allocated by emirate where relevant.

Common reasons for differences include:

1. Revenue recognised before the tax invoice is issued.
2. VAT becoming due on an advance before accounting revenue is recognised.
3. Credit notes recorded in different periods.
4. Foreign-currency invoices translated using different rates.
5. Out-of-scope income incorrectly treated as taxable.
6. Sales recorded gross of VAT in one system and net in another.

Each material difference should be documented and resolved.

5. Complete the accounts receivable close

The customer subledger should be reconciled to the accounts receivable control account. The review should cover:

1. Customer-by-customer balances.
2. Unallocated receipts.
3. Customer credit balances.
4. Overdue invoices.
5. Disputed invoices.
6. Retentions.
7. Unbilled receivables.
8. Related-party receivables.
9. Expected credit losses.
10. Subsequent collections after month-end.

Management should review the receivables ageing and ask:

1. Which balances are more than 30, 60 or 90 days overdue?
2. Are customers exceeding approved credit limits?
3. Are disputed invoices being resolved?
4. Are balances recoverable?
5. Are there unidentified customer payments?
6. Is the impairment provision reasonable?
7. Are collections deteriorating despite increasing revenue?

A business may report increasing sales and profit while simultaneously experiencing serious cash-flow pressure because customers are not paying on time.

6. Reconcile all bank and payment accounts

Every bank, credit-card and payment account should be reconciled monthly, including accounts with limited or no activity. The reconciliation should cover:

1. Current accounts.
2. Deposit accounts.
3. Foreign-currency accounts.
4. Credit cards.
5. Payment gateways.
6. Merchant-acquirer accounts.
7. Online collection platforms.
8. Petty cash.
9. Undeposited cash.
10. Cheques in hand.
11. Post-dated cheques where relevant.

The accounting balance should be agreed to the external statement after considering genuine outstanding items. Items requiring investigation include:

1. Old unpresented cheques.
2. Deposits recorded but not reflected by the bank.
3. Duplicate bank entries.
4. Unrecorded bank charges.
5. Unrecorded direct debits.
6. Loan instalments incorrectly posted entirely as expenses.
7. Personal payments through company accounts.
8. Unidentified customer receipts.
9. Transfers recorded in only one bank account.

A reconciling item should not be accepted merely because it makes the reconciliation balance.

7. Review unusual receipts and payments

The finance manager should review bank and cash activity for unusual transactions, including:

1. Large round-sum payments.
2. Cash withdrawals.
3. Payments to shareholders or directors.
4. Payments to new foreign suppliers.
5. Duplicate transfers.
6. Transactions without invoices.
7. Personal expenses.
8. Related-party payments.
9. Unusual customer refunds.
10. Transfers described only as “advance” or “miscellaneous”.

The purpose, approval and accounting treatment of these transactions should be documented during the month rather than reconstructed during the annual audit.

8. Complete the accounts payable close

The supplier subledger should be reconciled to the accounts payable control account. The review should cover:

1. Supplier invoices recorded during the month.
2. Unrecorded liabilities.
3. Goods received but not invoiced.
4. Supplier advances.
5. Supplier credit notes.
6. Debit balances in supplier accounts.
7. Duplicate invoices.
8. Old outstanding payables.
9. Related-party payables.
10. Foreign-currency balances.
11. Payments made after month-end.

Where practical, supplier statements should be obtained and reconciled to the company’s records.

Three-way matching — for purchases of goods, the company should compare:

1. Purchase order.
2. Goods-receipt or delivery evidence.
3. Supplier invoice.

For services, the invoice should be matched to:

1. Contract or engagement letter.
2. Approved scope of work.
3. Evidence that the service was provided.
4. Appropriate management approval.

9. Review input VAT recovery

Before input VAT is recorded as recoverable, the company should verify that the invoice meets the applicable VAT requirements and that the expenditure relates to the business’s taxable activities. The monthly review should consider:

1. Supplier name.
2. Supplier Tax Registration Number.
3. Customer details where required.
4. Invoice date.
5. Invoice number.
6. Description of goods or services.
7. Amount excluding VAT.
8. VAT amount.
9. Total consideration.
10. Correct VAT rate.
11. Business purpose.
12. Whether VAT is recoverable, restricted or blocked.
13. Whether the invoice relates to the correct legal entity.

An invoice addressed to an employee, shareholder or another group company should not automatically be treated as the company’s recoverable input VAT. The company should also identify transactions involving:

1. Imported services.
2. Imported goods.
3. Reverse-charge obligations.
4. Customs declarations.
5. Entertainment expenses.
6. Motor vehicles.
7. Employee-related costs.
8. Exempt activities.

10. Record accruals and unbilled expenses

Expenses should generally be recognised in the period in which they are incurred, even where the invoice is received later. Common monthly accruals include:

1. Utilities.
2. Rent and service charges.
3. Audit fees.
4. Accounting and tax fees.
5. Legal and consultancy fees.
6. Employee bonuses.
7. Sales commissions.
8. Leave pay.
9. End-of-service benefits.
10. Interest expense.
11. Freight and customs charges.
12. Marketing services.
13. Software subscriptions.
14. Repairs and maintenance.
15. Inventory received but not invoiced.

Each accrual should show:

1. Nature of the expense.
2. Calculation.
3. Relevant accounting period.
4. Supporting information.
5. Preparer.
6. Reviewer.
7. Expected reversal or settlement date.

Old accruals should be reviewed rather than carried forward automatically.

11. Review and amortise prepayments

Payments made in advance should be allocated over the period receiving the benefit. Common UAE business prepayments include:

1. Annual rent.
2. Insurance.
3. Trade-licence renewals.
4. Software subscriptions.
5. Maintenance contracts.
6. Advertising packages.
7. Professional retainers.
8. Employee medical insurance.
9. Visa and immigration costs, depending on the accounting policy.

The prepayment schedule should show:

1. Supplier.
2. Description.
3. Original payment.
4. Start date.
5. End date.
6. Monthly expense.
7. Closing prepaid balance.

The schedule should be reconciled to the general ledger every month.

12. Reconcile inventory and cost of sales

Businesses holding inventory should reconcile physical and system quantities to the inventory general ledger. The monthly process should review:

1. Opening inventory.
2. Purchases.
3. Production.
4. Goods received.
5. Sales and consumption.
6. Returns.
7. Transfers between locations.
8. Write-offs.
9. Closing inventory.
10. Cost of sales.

Management should investigate:

1. Negative stock quantities.
2. Unusual gross-profit margins.
3. Slow-moving inventory.
4. Obsolete or expired stock.
5. Damaged goods.
6. Count differences.
7. Consignment inventory.
8. Goods in transit.
9. Transactions recorded close to month-end.

A full physical inventory count may not be required every month, but cycle counts should be performed for significant or high-risk items.

Inventory cut-off example: goods are delivered to the company on 30 July, but the supplier invoice is dated 3 August. Where control of the goods passed to the company before July month-end, the inventory and corresponding liability may need to be recorded in July.

13. Update the fixed-asset register

The fixed-asset register should be updated for:

1. New asset purchases.
2. Assets brought into use.
3. Transfers between locations.
4. Disposals.
5. Scrapped assets.
6. Depreciation.
7. Impairment indicators.
8. Assets under construction.
9. Leasehold improvements.
10. Intangible assets.

The accounting team should distinguish between:

1. Repairs and maintenance.
2. Capital improvements.
3. Replacement of major components.
4. New asset purchases.

A payment should not be capitalised only because it is large; similarly, an item should not be expensed merely because the invoice describes it as “maintenance.” The monthly depreciation expense should be reconciled to the fixed-asset register.

14. Review leases and rental arrangements

The company should maintain a complete schedule of:

1. Office leases.
2. Warehouse leases.
3. Vehicle leases.
4. Equipment leases.
5. Staff accommodation.
6. Security deposits.
7. Rent-free periods.
8. Lease renewals and amendments.

Depending on the accounting framework, the monthly close may require:

1. Right-of-use asset depreciation.
2. Lease-liability interest.
3. Lease payments.
4. Straight-line rent adjustments.
5. Separation of service components.
6. Reconciliation of security deposits.

Lease renewals, amendments and early terminations should be communicated to the accounting team promptly.

15. Complete the payroll close

Payroll should be reconciled to approved employee records and actual salary payments. The monthly payroll close should cover:

1. Basic salaries.
2. Allowances.
3. Overtime.
4. Bonuses.
5. Commissions.
6. Unpaid leave.
7. Employee deductions.
8. Expense reimbursements.
9. Salary advances.
10. Final settlements.

The payroll report should be reconciled to:

1. Employment contracts.
2. Human-resources records.
3. Bank transfers.
4. Wage Protection System records where applicable.
5. The general ledger.

The company should also update employee-related liabilities such as:

1. Accrued leave.
2. End-of-service benefits.
3. Unpaid bonuses.
4. Unpaid commissions.
5. Expense claims.
6. Final-settlement liabilities.

Employee provisions should not be reviewed only at year-end.

16. Reconcile employee advances and expense claims

Employee advances should be cleared against approved supporting documents within a defined period. The monthly review should identify:

1. Old employee advances.
2. Expenses without invoices.
3. Personal expenditure.
4. Duplicate reimbursements.
5. Advances exceeding policy limits.
6. Amounts recoverable from employees.
7. Incorrect foreign-currency translations.

Material or old employee balances should be escalated to management.

17. Reconcile loans and finance arrangements

For each loan, vehicle finance agreement or shareholder loan, the company should maintain a schedule showing:

1. Opening principal.
2. Additional borrowing.
3. Principal repayments.
4. Interest expense.
5. Finance fees.
6. Closing principal.
7. Current portion.
8. Non-current portion.
9. Security and covenant information.

A loan repayment should be divided between:

1. Reduction of the principal liability.
2. Finance cost or interest.

Recording the entire monthly instalment as an expense overstates finance costs and understates the liability. The review should also identify:

1. Unrecorded accrued interest.
2. Changes in repayment terms.
3. Covenant breaches.
4. Related-party financing.
5. Foreign-currency loans.
6. Refinancing or settlement charges.

18. Review shareholder and director accounts

Transactions involving owners, shareholders, partners and directors require additional attention. The monthly close should clearly distinguish between:

1. Salary or remuneration.
2. Expense reimbursement.
3. Dividend or profit distribution.
4. Capital contribution.
5. Shareholder loan.
6. Loan repayment.
7. Personal withdrawal.
8. Business expense paid personally by an owner.

These items should not be recorded in a general “director account” without supporting documents and clear classification. Personal expenditure should be separated from business expenditure, and material payments to owners, directors and related parties should also be reviewed for Corporate Tax and transfer-pricing implications.

19. Reconcile intercompany and related-party balances

Group companies should exchange and reconcile intercompany statements every month. The reconciliation should cover:

1. Opening balance.
2. Intercompany sales and purchases.
3. Management charges.
4. Shared-cost allocations.
5. Loans and interest.
6. Payments made on behalf of another entity.
7. Foreign-exchange differences.
8. Closing balance.

Both entities should agree on:

1. Amount.
2. Currency.
3. Nature of transaction.
4. Settlement terms.
5. Counterparty classification.

Common causes of differences include:

1. Transactions recorded in different months.
2. Payments made on behalf of another entity.
3. Different exchange rates.
4. Credit notes recorded by only one company.
5. Management charges without agreements.
6. Transactions recorded under the wrong group company.

Material differences should not be delayed until year-end or the external audit.

20. Revalue foreign-currency balances

Foreign-currency monetary balances may require retranslation using the relevant month-end exchange rate. These balances may include:

1. Foreign-currency bank accounts.
2. Customer receivables.
3. Supplier payables.
4. Intercompany accounts.
5. Loans.
6. Accrued income.
7. Accrued expenses.

The company should use a consistent and supportable exchange-rate source and retain evidence of the rate applied. Realised and unrealised foreign-exchange movements should be separately identifiable where required for management reporting or tax purposes.

21. Reconcile VAT control accounts

The VAT reconciliation should not be limited to copying figures from the accounting software into the VAT Return. The finance team should reconcile:

1. Output VAT.
2. Recoverable input VAT.
3. Reverse-charge VAT.
4. Import VAT.
5. VAT paid.
6. VAT refunds.
7. VAT Return balances.
8. VAT suspense accounts.
9. Credit-note adjustments.
10. Voluntary Disclosure adjustments.

The closing VAT balance should agree to:

1. The general ledger.
2. The filed or draft VAT Return.
3. The EmaraTax account, where applicable.

The monthly VAT review should also consider:

1. Correct VAT rate.
2. Correct date of supply.
3. Place-of-supply rules.
4. Zero-rating evidence.
5. Exempt supplies.
6. Out-of-scope transactions.
7. Input VAT restrictions.
8. Reverse-charge obligations.
9. Import records.
10. Customs declarations.
11. Bad-debt relief where relevant.

22. Maintain a monthly Corporate Tax schedule

Corporate Tax is normally filed annually, but the supporting tax-adjustment schedule should be maintained every month. Ministerial Decision No. 114 of 2023 requires Taxable Persons to apply IFRS for Corporate Tax purposes. A Taxable Person with revenue not exceeding AED 50 million may apply IFRS for SMEs, while a person with revenue not exceeding AED 3 million may apply the cash basis of accounting, subject to the relevant conditions.

The monthly Corporate Tax schedule should identify accounts that may require tax adjustment, including:

1. Entertainment expenses.
2. Government fines and penalties.
3. Donations and gifts.
4. Personal expenses.
5. Related-party transactions.
6. Connected Person payments.
7. Interest expenditure.
8. Exempt Income.
9. Tax losses.
10. Provisions and write-offs.
11. Capital expenditure.
12. Recoverable VAT.
13. Foreign income taxes.
14. Unrealised gains and losses.
15. Expenses relating to Exempt Income.

Management may also calculate an estimated monthly Corporate Tax provision using:

1. Year-to-date accounting profit.
2. Estimated non-deductible expenses.
3. Exempt Income.
4. Available tax reliefs.
5. Tax losses.
6. Applicable Corporate Tax rates.

The final Corporate Tax Return and related payment are generally due within nine months after the end of the relevant Tax Period.

23. Perform separate checks for free zone companies

A free zone company should not assume that all income automatically qualifies for the 0% Corporate Tax rate. Where a company intends to qualify as a Qualifying Free Zone Person, the accounting system should separately track:

1. Income from Free Zone Persons.
2. Income from Non-Free Zone Persons.
3. Qualifying Activities.
4. Excluded Activities.
5. Non-qualifying revenue.
6. Immovable-property income.
7. Intellectual-property income.
8. Domestic Permanent Establishment income.
9. Foreign Permanent Establishment income.
10. Direct and indirect expense allocations.
11. Related-party transactions.
12. Substance-related costs and employees.

Customer, activity, jurisdiction and transaction classifications should be maintained throughout the year. Reconstructing this information after year-end can be difficult and unreliable.

24. Prepare for UAE electronic invoicing

The UAE eInvoicing programme is now a significant part of finance-system planning. An eInvoice is structured invoice data exchanged electronically between a supplier and buyer and reported electronically. A PDF, scanned invoice, Word document or invoice sent by email is not, by itself, an eInvoice. The pilot programme commenced on 1 July 2026 for a selected group of taxpayers.

Under the updated implementation timetable: businesses with annual revenue equal to or exceeding AED 50 million must appoint an Accredited Service Provider by 30 October 2026 and implement eInvoicing from 1 January 2027; businesses with annual revenue below AED 50 million must appoint an Accredited Service Provider by 31 March 2027 and implement eInvoicing from 1 July 2027; and in-scope government entities are scheduled to implement eInvoicing from 1 October 2027, subject to the applicable appointment deadline.

Businesses should use the monthly close to improve:

1. Customer master data.
2. Supplier master data.
3. Tax Registration Numbers.
4. Invoice numbering.
5. Product and service descriptions.
6. VAT codes.
7. Credit-note processes.
8. Accounting-system integrations.
9. Duplicate invoice controls.
10. Rejected invoice monitoring.
11. Structured data completeness.
12. Invoice-to-ledger reconciliations.

Electronic invoicing will not remove the need for a monthly close — it will make accurate master data, system controls and timely reconciliations even more important.

25. Reconcile every material balance-sheet account

Every material balance-sheet account should have a supporting reconciliation. This includes:

1. Cash and bank.
2. Trade receivables.
3. Inventory.
4. Prepayments.
5. Other receivables.
6. Employee advances.
7. Fixed assets.
8. Right-of-use assets.
9. Intangible assets.
10. Trade payables.
11. Accruals.
12. Employee liabilities.
13. VAT.
14. Corporate Tax.
15. Loans.
16. Lease liabilities.
17. Related-party accounts.
18. Share capital.
19. Retained earnings.

A reconciliation should explain what makes up the balance; it should not merely compare the trial balance to another report generated from the same accounting system.

Suspense and clearing accounts — the finance team should review:

1. Suspense accounts.
2. Unidentified receipts.
3. Payment-clearing accounts.
4. Goods-received-not-invoiced accounts.
5. Payroll-clearing accounts.
6. Intercompany-clearing accounts.

Old or unexplained balances may indicate:

1. Incomplete postings.
2. Duplicate transactions.
3. Missing documentation.
4. Incorrect system integration.
5. Unauthorised transactions.
6. Fraud risk.

A suspense account should be temporary, not a permanent location for unexplained balances.

26. Review the complete trial balance

After posting the closing entries, the finance manager should review the full trial balance. Items requiring investigation may include:

1. Negative cash balances.
2. Negative fixed assets.
3. Debit balances in supplier accounts.
4. Credit balances in customer accounts.
5. Large suspense balances.
6. Revenue accounts with debit balances.
7. Expense accounts with credit balances.
8. Dormant accounts with new activity.
9. Unusual round-sum journals.
10. Balances unchanged for several months.
11. Large entries posted late in the close.
12. Duplicate general-ledger accounts.

The trial-balance review can identify errors that individual account reconciliations may not reveal.

27. Perform analytical and variance review

Management should compare the financial results against:

1. Prior month.
2. Budget.
3. Prior year.
4. Forecast.
5. Operational information.
6. Expected gross margin.
7. Headcount.
8. Customer activity.
9. Inventory movements.

Useful monthly indicators may include:

1. Revenue growth.
2. Gross-profit percentage.
3. Operating margin.
4. Net-profit margin.
5. Debtor days.
6. Creditor days.
7. Inventory days.
8. Working-capital cycle.
9. Current ratio.
10. Cash runway.
11. Budget variance.
12. Customer concentration.
13. Revenue per employee.
14. Recurring revenue percentage.

Significant or unexpected movements should be explained in writing. Examples include:

1. Revenue increased, but customer collections deteriorated.
2. Gross margin declined because freight costs were not recovered from customers.
3. Profit improved because of a one-time gain rather than stronger operations.
4. Cash increased because suppliers were paid late.
5. Payroll increased faster than revenue.
6. Inventory increased despite slower sales.

The accounting close is not complete merely because the ledger balances — management should understand why the financial results changed.

28. Prepare the management reporting pack

A monthly management pack may include:

1. Executive financial summary.
2. Statement of profit or loss.
3. Statement of financial position.
4. Cash-flow statement or cash-flow bridge.
5. Budget-versus-actual analysis.
6. Revenue analysis by service, customer or location.
7. Gross-margin analysis.
8. Operating-expense analysis.
9. Accounts receivable ageing.
10. Accounts payable ageing.
11. Bank and liquidity position.
12. VAT and Corporate Tax summary.
13. Working-capital indicators.
14. Forecast for the next three to twelve months.
15. Key risks and management actions.

The report should include concise commentary, not just financial statements.

29. Review manual journal entries

Manual journal entries may be necessary, but they carry a higher risk of error, manipulation or management override. Every manual journal should include:

1. Journal date.
2. Accounts affected.
3. Clear narration.
4. Supporting calculation.
5. Supporting documents.
6. Preparer.
7. Reviewer.
8. Reason for the entry.

Higher-risk journal entries include:

1. Entries posted directly to revenue.
2. Entries posted directly to bank accounts.
3. Entries involving shareholders.
4. Round-sum entries.
5. Entries posted after the close deadline.
6. Entries that reverse automatically without explanation.
7. Entries posted and approved by the same person.

The finance manager should review a complete manual-journal report every month.

30. Approve and lock the accounting period

Once the monthly accounts are reviewed and approved, the accounting period should be locked. Any later adjustment should require:

1. Documented reason.
2. Authorised approval.
3. Supporting evidence.
4. Clear audit trail.
5. Consideration of tax implications.
6. Consideration of whether previously issued management reports require revision.

Without a formal lock, previously reported numbers may change without management’s knowledge.

Summary month-end checklist

Common month-end closing mistakes

• Recording transactions only when cash moves — this can distort revenue, expenses, receivables and payables where accrual accounting applies.
• Waiting until the VAT Return is due — missing invoices and incorrect VAT codes may be difficult to correct within the filing deadline.
• Treating the bank reconciliation as the entire close — a reconciled bank balance does not confirm that revenue, inventory, payroll, VAT, receivables and liabilities are correct.
• Carrying forward unexplained balances — suspense accounts, unidentified receipts and old accruals should be resolved rather than copied into the next month.
• Mixing shareholder and business expenditure — personal and company transactions should be separated and properly documented.
• Recording loan instalments entirely as expenses — only the interest or financing component is generally an expense; the principal reduces the liability.
• Ignoring unbilled revenue and unrecorded costs — this can significantly overstate or understate monthly profitability.
• Failing to reconcile VAT to the general ledger — VAT Returns prepared separately from the accounting records may contain inconsistencies.
• Reviewing Corporate Tax only at year-end — tax-sensitive expenses and Related Party transactions should be identified throughout the year.
• Closing without management analysis — a balanced trial balance is of limited value where management does not understand cash flow, margins or working-capital movements.

Warning signs that the close process is weak

Management should investigate where:

1. Bank reconciliations are more than one month behind.
2. The trial balance contains large suspense accounts.
3. Customer and supplier ledgers do not agree to control accounts.
4. VAT Returns do not reconcile to the ledger.
5. Inventory quantities are negative.
6. Old receivables have no impairment assessment.
7. Employee advances remain outstanding for several months.
8. Related-party balances are not confirmed.
9. Shareholder expenses are included in general business costs.
10. Accruals are reversed automatically without review.
11. Financial results change after reports have been issued.
12. Manual journals are posted without approval.
13. Group entities report different intercompany balances.
14. No monthly Corporate Tax schedule is maintained.
15. Documents are stored only in personal email accounts.
16. The company cannot produce customer or supplier ageing reports.
17. Revenue is increasing while cash collections are deteriorating.

Record-retention approach

The Commercial Companies Law generally requires companies within its scope to retain accounting records for at least five years after the relevant financial year. Corporate Tax records generally need to be retained for at least seven years after the relevant Tax Period. As a practical policy, UAE businesses should generally retain their core accounting and tax records for at least seven years and apply a longer period where a specific VAT, regulatory, contractual or legal requirement applies.

The archive should include:

1. Accounting-system backups.
2. Tax invoices and credit notes.
3. Contracts.
4. Bank statements.
5. Reconciliations.
6. VAT Returns.
7. Corporate Tax Returns.
8. Tax calculations.
9. Payroll records.
10. Asset registers.
11. Inventory records.
12. Related-party agreements.
13. Management approvals.
14. Financial statements.
15. Audit reports.

Documents should be organised by:

1. Legal entity.
2. Financial year.
3. Accounting month.
4. Transaction category.
5. Tax type.

How long should the monthly close take?

There is no single closing period suitable for every business. A practical maturity framework is:

Speed should not come at the expense of accuracy. A controlled eight-day close is more valuable than a five-day close containing unsupported balances.

How GKA Chartered Accountants can assist

GKA Chartered Accountants can support UAE businesses with:

1. Monthly bookkeeping and accounting.
2. Month-end closing procedures.
3. Bank reconciliations.
4. Customer and supplier reconciliations.
5. Management accounts.
6. Cash-flow forecasts.
7. VAT reconciliations and Return preparation.
8. Corporate Tax adjustment schedules.
9. Payroll accounting.
10. Employee-liability calculations.
11. Inventory and fixed-asset reconciliations.
12. Related-party and intercompany reconciliations.
13. Accounting-system implementation.
14. Accounting-record clean-up.
15. IFRS and IFRS for SMEs reporting.
16. Audit readiness.
17. Year-end closing support.
18. eInvoicing accounting-system readiness.

A properly managed monthly close provides more than compliant accounts. It gives business owners timely information to manage profitability, liquidity, tax exposure and operational risk.

Frequently asked questions

Disclaimer

This article is intended for general informational purposes only and does not constitute accounting, tax, audit or legal advice. The appropriate accounting treatment depends on the company’s legal form, accounting framework, industry, contractual arrangements, tax position and specific transactions. UAE legislation, tax guidance and electronic invoicing requirements may be amended. Businesses should obtain professional advice based on their circumstances and confirm the applicable requirements before taking action.