Procedure

BUSINESS MANAGEMENT SYSTEM No.

CLOSING PROCEDURE Revision 0

Southern Africa

CLOSING PROCEDURE

Rev.
Approval Name Signature Date
No.

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 Procedure
BUSINESS MANAGEMENT SYSTEM No.
CLOSING PROCEDURE Revision 0

CONTENTS

PURPOSE 3

SCOPE 3

REFERENCE 3

ABBREVIATIONS 3

DEFINITIONS 3

ROLES AND RESPONSIBILITIES 4

PROCEDURE 5

RECORD CONTROL 10

REVISION CONTROL 11

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 Procedure
BUSINESS MANAGEMENT SYSTEM No.
CLOSING PROCEDURE Revision 0

1. PURPOSE

1.1 The purpose of this document is to provide a general overview of the process to be followed for
reviewing the accounting records at the end of a period prior to closing.

2. SCOPE

2.1 This document is applicable to all responsible for the financial accounts of Services Southern
Africa ( Water Services, Waste Services, Botswana and Namibia)

3. REFERENCE

3.1 Group Closing Procedure

4. ABBREVIATIONS

4.1 CFO - Chief Financial Officer

4.2 FM - Financial Manager
4.3 ERP - Enterprise Resource
4.4 IFRS - International Financial Reporting standards
4.5 GAAP - Generally Accepted Accounting Principle
4.6 HR - Human Resources
4.7 GL - General Ledger
4.8 VAT - Value Added Tax
4.7 MAR - Monthly Activity Review

5. DEFINITIONS

Definition Description

Financial statements are prepared under the accrual

concept which requires that income and expense
must be recognized in the accounting periods to
Accruals which they relate rather than on a cash basis. If an
operating contract specifies that the cash basis must
be used, the accounting will be adjusted according to
the contract.

Company Code A field in the ERP used to represent a legal entity.

A campaign to evaluate the internal control system to

ensure the reliability and integrity of the financial
information. In addition, it serves as an alert in order
Control Assessment Process (CAP)
to ensure that the governance, management and the
controls in place are reliable at all levels of the
organization.

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BUSINESS MANAGEMENT SYSTEM No.
CLOSING PROCEDURE Revision 0

The systematic allocation of the depreciable amount

Depreciation
of an asset over its useful life.

An entry directly posted into the ERP system without

Direct entry
using the R2R system or the P2P system.

Enterprise Resource Planning (ERP) is a category of

business-management software—typically a suite of
ERP integrated applications—that an organization can use
to collect, store, manage and interpret data from
many business activities

Transaction between two company codes. All

intercompany transactions must be processed in
accordance with corporate policies. Inter-company
Inter-company
suppliers must provide to their trading partners
appropriate, relevant and accurate Information for all
products or service billing transactions

Transaction between two cost centers or two profit

centers within the same company code. All intra-
Intra-company
company transactions must be processed in
accordance with corporate policies.

the logging of transactions into accounting journal

items. The journal entry can consist of several
recordings, each of which is either a debit or a credit.
Journal entries must be accurately entered into the
Journal entries general ledger within the correct accounting period.
All manual general ledger journal entries must be
documented, reviewed and approved by GL Team
supervision. These entries are also made available
for Business Finance review

is the financial consolidation system used by for all

entities.

6. ROLES AND RESPONSIBILITIES

6.1 The Finance Manager is responsible for preparation and distribution of the monthly financial
activities closing calendar.
6.2 The Finance Manager is responsible for producing the IFRS monthly reporting and package.
6.3 The CFO is responsible for reviewing all period-end closing activities to ensure the period-end
financial reports accurately reflect the results of the company’s activities.

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BUSINESS MANAGEMENT SYSTEM No.
CLOSING PROCEDURE Revision 0

7. PROCEDURE

The Financial Period Closing is an accounting procedure undertaken at the end of the month to close out
the current posting period in preparation for financial reporting.
The close process is performed in order to ensure completeness and accuracy of the financial data. It is
extremely important that the lines of communication remain open so that any changes or significant
events are accounted for promptly and correctly.

7.1 CLOSE PERIOD MANAGEMENT

7.1.1 Closing Calendar
The Financial Manager should prepare and distribute the monthly financial statement closing
calendar, which lists the various deliverables and deadlines as part of the close process in
alignment with the dates established by for reporting. This calendar must be communicated to
all employees involved in the closing process.
7.1.2 The FM should create lists of closing activities in the cockpit work center, and assign responsible
employees to perform those tasks and deadlines to complete certain tasks.

7.2 MANAGEMENT OF PERIODS

7.2.1 Open the accounting period
7.2.1.1 The Finance Manager opens the reference accounting period:
● in the working references (IFRS and local GAAP) of the general and management accounting
modules
● in other applications consistent with the accounting period (supply, inventory, sales, payroll,
treasury applications)
7.2.1.2 The Finance Manager must ensure that:
● the prior period is properly closed; and
● for the first period at the beginning of the year, the end of the previous financial year is closed.
7.2.2 Close the accounting period
7.2.2.1 The Finance Manager closes the reference accounting period after any adjustments during the
Group accounts closing and package final publication process:
● in the working references (IFRS and local GAAP) of the general and management accounting
modules; and
● in other applications consistent with the accounting period (supply, inventory, sales, payroll,
treasury applications)
7.2.2.2 Close of the annual accounting period must be performed after finalization of accounts review
and audit.

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7.3 CLOSE THE TRANSACTION CYCLES

7.3.1 Close the purchasing cycle
7.3.1.1 The account payable department must perform the following:
● Record the final supplier invoices of the month.
● Record the Travel and expenses reports of the month.
● Identify invoices, accrued credit notes, accrued expenses and prepayments and recognize them
in the accounts.
● Review, cross-check and justify trade payable accounts and trade payable accounts in debit at
the period end.
● Prepare the reconciliation between the sub-ledgers and the General Ledger and clear the
reconciling items.
7.3.2 Close the Sales/Works cycle
7.3.2.1 The account receivable department/ Financial Controllers must perform the following:
● Record the final customer invoices of the month.
● Calculate income on a percentage completion basis and recognize it in the accounts.
● Calculate losses to completion and recognize them in the accounts.
● Identify sales invoice accruals and credit note accruals and recognize them in the accounts.
● Review, cross-check and justify trade receivable accounts and trade receivable accounts in credit
at the period end.
● Identify and calculate write-downs on trade receivables.
7.3.3 Close the investment cycle
7.3.3.1 For the Fixed assets-current assets cycle:
● Record the last movements in the “fixed assets” application; calculate depreciation, amortization
and impairment (where applicable)
● Manage the physical inventory (if any) and reconcile with the “fixed assets” base, at least once
annually.
7.3.4 Close the inventories cycle
7.3.4.1 For the Inventories cycle:
● Link inventory movements over the period, including changes in inventory of the period and
adjustments and write-down calculations
● Manage the physical inventory (if any) and reconcile the physical inventory / permanent inventory
● Identify and validate inventory write-downs
7.3.5 Close the Employees/Payroll cycle

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7.3.5.1 For the Employees-Payroll cycle:

● Recognize in the accounts the payroll of the current month + contributions + earned vacation and
other benefits of the period ended.
● Cross-check, review and justify related receivables / payables of the employees-payroll cycle.
7.3.6 Close the Financing cycle
7.3.6.1 For the Treasury-Financing cycle:
● Recognition of the last treasury movements.
● Prepare the bank reconciliations.
● Calculate, recognize in the accounts and control interest on borrowings, loans and current
accounts.
● Link other income and expenses over the period and analyze other debts and receivables related
to the Treasury cycle.
● Calculate the fair value of financial instruments and recognize them in the accounts.
7.3.7 Reconcile sub accounts and the general ledger
7.3.7.1 For all cycles, the general accountant must reconcile the subledgers, fixed asset file, payroll
journal with the amount reported in the general ledger.

7.4 MANAGE PROVISIONS

7.4.1 The Finance Manager must integrate in the closing instructions a specific process and schedule
enabling the submission of information on provisions:
● identification;
● recognition in the accounts; and
● reconciliation with the legal reporting package, Human Resources for disputes and employee
benefits, taxation for tax disputes and the operating departments for provisions relating to
activities
7.4.2 The Financial Control Manager must perform the following:
● Identify items to be provided.
● Estimate the amount to be provided based on information gathered.
● Based on the reversal schedule, calculate non-current provisions in accordance with the
thresholds defined by the group.
● Analyze provision reversals in conjunction with the corresponding expenses recognized in the
period.
7.4.3 The Finance Manager must validate the provisions.

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7.4.4 The Accountants must update the provisions in the accounts (new provision, change in the
amount of an existing provision or reversal of a provision extinguished or no longer necessary,
discounting based on the reversal schedule).
7.5 MANAGE TAXES AND DUTIES
7.5.1 The Finance Manager must set and communicate a closing schedule for monthly, quarterly, half-
year and annual closings:
● Indicate operations concerning current taxes and duties.
● Plan file review dates.
● Schedule to be prepared based on business, organization and information system specificities.
7.5.2 Main closing points of taxes and duties activities concern:
● Inventory tax incomes and expenses to be recognized in the accounts.
● Justify VAT accounts.
● Provide tax risks.
● Determine income tax expense.
● Calculate deferred tax.
● Recognize inventory entries.
● Produce and validate the closing file for the taxes and duties cycle.

7.6 MANAGE OFF-BALANCE SHEET COMMITMENTS

7.6.1 The Finance Manager must validate the cut-off on the remuneration of banking guarantees.
7.6.2 Produce a schedule for the line-by-line monitoring of Off-balance sheet commitments. This
summary will be used as a basis for the input of data into the appendices.
7.6.3 Minimum verifications:
● that certain commitments identified do not result in the recognition of an amount in the local
GAAP and/or IFRS balance sheet.
● that commitments are correctly valued.
● that all information required for the preparation of the appendices (maturities,
inter-company/non-group, etc.) and the notes to the local accounts is available.
● that movements are explained.
● Communicate the off-balance sheet commitments monitoring schedule to the entity’s accounting
manager.

7.7 RECONCILE INTERCOMPANY TRANSACTIONS

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7.7.1 The closing instructions must be sent by the consolidation department to clarify the timetable for
the reconciliation phases.
7.7.2 Inter-company reconciliations must be performed at least at each quarterly closing.
7.7.3 Apply recognition rules for inter-company cut-off (including management fees, etc.).

7.8 PREPARE THE CLOSING FILE

7.8.1 The closing file is prepared:
● under IFRS for monthly updates; and
● under local GAAP for updates at frequencies based on regulatory or contractual obligations.
7.8.2 The accounts closing file must include all documentation necessary to the justification of the
accounts for each cycle covered:
● Purchasing;
● sales;
● Treasury-financing;
● Employees-payroll;
● Inventories; and
● Fixed assets, etc.)
in accordance with accounting standards: accruals, completeness of transactions and events,
traceability of accounting journals.
7.8.3 The contents of the closing file must be regularly updated to take account of instructions received
and changes in the activities, contracts and transactions of the entity and information systems
implemented. In particular, it must include:
● the general ledger, assets, liabilities and income statement;
● justification of balance sheet movements;
● an analytical review in conjunction with management control (comparison Y/Y-1 and Y/Budget);
● reconciliation of the sub ledgers with the general ledger;
● justification of each general ledger account; and
● justification of cut-off and provisions.
7.8.4 List of controls to be performed:
● Analyze movements of the period and justify the balance with supporting documents;
● Verify that all suspense accounts (or equivalent internal transfer accounts) are cleared, or
reduced to zero, with the resolution of any problems identified and reclassification journals
correctly recognized and documented; and
● in the case of suspense accounts cleared but not reduced to zero, justify the balance

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BUSINESS MANAGEMENT SYSTEM No.
CLOSING PROCEDURE Revision 0

7.9 PRODUCE THE IFRS MONTHLY REPORTING PACKAGE

7.9.1 The IFRS monthly reporting package must include, in particular:
● key indicators;
● the monthly accounts: income statement and balance sheet with analytical review (Y actual / Y -1
actual)
● management analyses (including actual / forecast bridges,activity analyses);
● provisions recognized in the period;
● "post-closing” events;
● formally documented points of attention on the accounting treatment of recent events or complex
transactions.
7.9.2 The IFRS monthly accounts must be presented to the CFO and general management for
validation.
7.9.3 The Finance Control Manager/ Financial Manager must produce a management reporting
package using the Group format for the Monthly Activity Review (MAR) each month.
7.9.4 The monthly reporting package and the closing options must be validated by the CFO and the
CEO.
7.9.5 The Finance Manager must prepare the package based on the closing file and must be
loaded/input and validated in accordance with the submission timetable set by the Group.
7.9.6 The package is produced as follows:
● Input and/or integration of the main balances, broken down by flows and inter-company balances
according to the accounts;
● Input of the Appendices (breakdown based on the period);
● Generation and resolution of package controls;
● Validation and publication of the package.
7.9.7 The accounts closing file should be made available to the external auditors. It will also include the
reconciliation of the balance sheet and income statement for IFRS reporting purposes and under
local GAAP.

8. RECORD CONTROL

Records Keeping – Retained documented information

All the relevant records must be retained in accordance with LCC-QPR-004 Record Retention Policy, in
order to demonstrate conformity to this work instruction.

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BUSINESS MANAGEMENT SYSTEM No.
CLOSING PROCEDURE Revision 0

Title Retention Period Retention Location Reason For Document

Financial statement 7 Years google drive Audit purposes

9. REVISION CONTROL

Revision No: Description of Change Changed By Date

0 New procedure 30/01/2023

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