The Closing Cycle

• Run a month-end close against a days-to-close target with limited staff hours.
• Judge errors against materiality, individually and in aggregate (SAB 99), and see deferred errors carry forward (SAB 108).
• Make and defend judgment calls on accruals, reserves, cutoff and disclosures.
• Recognize control lapses and how auditors grade them: deficiency, significant deficiency, material weakness (AS 2201).
• Separate preparing from approving: every memo signed off by a second person, and what an approval gap costs in the audit.
• Read an audit report: the opinion, proposed adjustments and the management letter.

1. 1
   Inbox arrival

   The same close items reach every team on the same day: accruals, recs, adjustments, review, reporting, audit, process, each tagged urgent, important or info. An item the class has had before comes back with different amounts.
2. 2
   Spend the hours

   Each treatment shows the staff hours it takes. The close has 4.5 hours per item; the team decides where thoroughness pays and where a quicker sound call will do.
3. 3
   Choose or write

   Choice items hide their grades until you answer; memos are graded 0-10. After answering, the inbox shows the grade and what the call left on the books.
4. 4
   Close and test

   Every 5 active days the close ends: days to close against the target, and the uncorrected-error list tested against materiality. The next close opens with a review: book the corrections or carry them.
5. 5
   The audit

   At year-end the auditor turns what is left into proposed adjustments, grades the control lapses, issues the opinion and writes the management letter.
6. 6
   Prepare, review, reflect

   With roles on, every memo is prepared by one teammate and signed off by another (ideally the Controller), and each student writes a short reflection from their role after each close.

One Close Score on every screen: the plain average of the four pillars, each 60% graded calls and 40% measured from the team's books. Calls are graded against the options the team had (the best available option scores 100, the weakest 0; a memo its 0-10 grade × 10; a missed item 0), averaged by severity (urgent 1.5×, info 0.5×) from two neutral 50s. The measured parts: days to close (80 on target, 50 at 20% over), errors cleaned up by the next close, control findings (100 less 6 per deficiency, 15 per significant deficiency, 30 per material weakness), and errors left against materiality at each close test (0 for a restated close). A student's suggested grade is 70% Close Score + 30% their own work (25 points memo quality: their average memo grade, counted at n/(n+5) for n graded and the team's memo average for the rest; 5 points answering their share of the team's items on time); once any team in the class claims a role, that is 80% of the grade and role credit the other 20% (half owned work in each close: items the student's role owns, and for the Controller memos signed off; half a reflection of 40+ words on each close). With roles on, a memo no second teammate signed off is a light approval gap (0.1 of lapse weight in journal entries and approvals, 1.0 at most together): never reviewing costs a strong team 6 points of measured Audit Readiness, 0.6 on the Close Score. A team of one is never marked down for it.

• The books under the inbox

  Shortcuts leave dollar errors on an uncorrected-error list, tested against materiality at every month-end close. Small errors add up; errors passed on carry into the next close; over the line, the close is restated.

• A close calendar with staff hours

  Every treatment costs staff hours against a fixed budget per close. Thorough work slips the close past the company's days-to-close target; shortcuts close fast and pile up errors. Always picking the most thorough option stops being safe.

• The audit as the finale

  The Final Report is the team's audit report: the opinion, proposed adjustments, control findings graded deficiency to material weakness, the auditor's sample, and a management letter written from the team's own calls and memos.

• A grader with a memory

  The senior controller / audit partner grader sees the team's current books and its earlier calls and memos on the topic, so a memo that contradicts the team's own earlier position gets noticed.

• Three companies

  Sentinel Corp (SEC reporting, SOX, PCAOB; 5-day close target), Beacon Industries (PE-backed, covenant reporting; 8 days) and Crestmoor Foundation (net assets, donor restrictions, Form 990, Single Audit; 12 days), each with its own materiality and items.

• Light roles with a second-person review

  Four roles: Controller (the reviewer: review and process items, the close review, signing off memos), Senior Accountant (reconciliations and accruals), Technical Accounting & SEC Reporting (adjustments and reporting) and Audit Liaison (audit items). Every memo is prepared by one teammate and signed off by another; the inbox shows who did each, and the audit report counts the memos reviewed.