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Reconciliation Methods Best Practices

It is Important that Unbilled Receivable Amounts in the General Ledger Are Reconciled to Computed Unbilled Receivables in the Billing and Accounts Receivable Module. Following these simple steps should make the process easier.

Main Reconciliation Point

Suffix 12 G/L Account Amounts =
Billing Worksheet Unbilled Amounts =
Unbilled A/R Report Per Analysis Amounts

Reconciliation Methods — Step 1

Gather Documents and Give Yourself Some Time.

  • Be sure the sequence of postings and calculations are correct.
    • Post all journals.
    • Calculate, review, and post revenue.
    • Calculate, review, and post billings (make sure the Billing file is set up for each contract/task).
    • Print three key contract receivable sub-ledger reports: (1) Unbilled A/R Report (Analysis of Unbilled Receivables), (2) Aged A/R Report, and (3) Contract Revenue Summary, and one key general ledger report: (4) G/L Detail for suffixes 11, 12, and 30 for each respective contract.
    • A/R Report (Analysis of Unbilled Receivables), Aged A/R Report and the Contract Revenue Summary.

Reconciliation Methods — Step 2

Review the Four Key Sub-ledger Reports:

  • Compare the Per Analysis to the Per G/L — identify differences.
  • Compare Per G/L to the FS Code Summary — suffix 12 accounts.
  • Print out the Billing Worksheets.
  • Compare each Billing Worksheet’s cumulative unbilled to the Per G/L Column on the Unbilled Receivables Report.

Review the One Key G/L Ledger Report to Verify That the Amounts Posted to the G/L Match the Revenue Summary and Billing Reports.

If the Above Match, STOP.

If Not, Proceed to Step 3.

Reconciliation Methods — Step 3

  • Review the Postings to Suffix 12.
  • Compare the Prior Year’s Revenue on the Contract Revenue Summary to Actual Prior Year Numbers.
  • Check Billing Cumulative Totals.
  • Check Contract-to-date Cash Receipts to the A/R History Report.
  • If Still Not Reconciled:
    •  Write off the unbilled balance, if appropriate.

Unbilled Write-Off — Step 4

As a Last Resort

  • Write off the unbilled through contract revenue
    • Set up a contract called “Prior Years’ Adjustments”.
    • In the Contract Master File screen, enter a Revenue Adjustment amount (positive or negative, depending on whether you are increasing or decreasing revenue, respectively).
    • If needed, enter a contract value at least equal to the amount of the adjustment.
    • Compute revenue, print the Contract Revenue Summary, and post revenue.
    • Enter an adjusting journal to bring the unbilled amount in the contract’s suffix 12 account to zero. The other side of the entry should be the suffix 12 account of each contract receiving the adjustment.

or...

  • Write off the unbilled on the Income Statement by setting up an F/S code such as “Adjustments to Prior Year Revenue”.
    • Enter a journal entry between the suffix 12 unbilled account needing adjustment and an “Other” account type assigned to this F/S code.