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SUMMARY: What
to do when your payables aging report doesn't
match the A/P total on the Balance Sheet.
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Checking that your Vendor
Invoice Aging agrees to the A/P Account Balance on your
financials is an essential to maintaining accurate and
balanced books. We recommend you do this at least
monthly. There is a simple way to check this that takes
only a few seconds. Go to Accounting > General Ledger,
then under the Edit menu choose G/L Tools > The
Auditor. Within the Auditor choose the A/P Quick Check,
then click Start. This report will tell you if your
vendor invoice aging agrees to the balance sheet.
Your vendor invoice aging report should always equal the
balance of the A/P account on the balance sheet. That is,
the total of your unpaid A/P invoices always equals the
A/P account balance on your financial statements. This is
because A/P is seamlessly integrated with the G/L. When
posting a vendor invoice it instantly increases the A/P
account balance and the vendor balance on the aging, as
well, the A/P account balance and the vendor balance on
the aging is reduced as checks are posted.
There are only two things that should affect the A/P
account and vendor invoice aging. These two items are
accounts payable invoices and checks applied to those
invoices. The only exception is beginning balance entries
- discussed later. So in theory, matching the vendor
invoice aging to the general ledger A/P balance is very
simple because both should increase and decrease
simultaneously as A/P invoices and checks are posted or
unposted.
However, there are several ways in which the balances
between the vendor invoice aging and the balance sheet
can differ. These ways fall into two categories, user
errors and system errors. User errors are centered around
unintentionally affecting the vendor invoice aging or
your A/P account balance without affecting the other. A
simple example would be making a journal entry to the A/P
account. This would change the balance of the A/P
account, but have no affect on the aging, causing them to
go out of agreement. System errors are centered around
posting errors that a user normally can't control. For
example, you batch post a series of invoices but the A/P
account is not properly updated in the G/L. There are
techniques to discover and fix both kinds of errors to
bring your vendor invoice aging and A/P account balance
back into agreement.
This technical note discusses the possible scenarios that
explain why the totals don't match and how to fix them,
broken out by user errors and system errors, then
followed by some important concepts to understand:
USER ERRORS
Beginning balances were not entered correctly when your
database was started.
When you first started your Clients & Profits
database, you should have entered two things at the same
time: your A/P beginning balance and any unpaid vendor
invoices. The total of the unpaid vendor invoices should
have exactly equaled the A/P beginning balance in the
G/L. If not, then your balances were off from the
beginning.
It's a very good idea when entering your beginning
balance invoices and beginning balance journal entry to
print a balance sheet, then print the vendor invoice
aging, to make sure they agree. Or, just print the A/P
Quick Check, as mentioned above, which does the same
thing, just much more quickly. If you didn't do this,
then there is a way to do this at a later time. Print the
Trial Balance for the period you started C&P. Because
you should have entered your beginning balance journal
entry into the period before this (i.e. if you started in
period 4 it should have been entered into period 3), the
beginning balance for the Trial Balance for your first
period using C&P should represent the beginning
balance journal entry to the A/P account. To find the
beginning balance invoices, go into the Auditor and print
the A/P Exception Report. At the bottom of this report
are the invoices that represent your beginning balance
invoices (where you debited/credited the A/P account).
The total of these should equal the beginning balance on
the trial balance for the first period using C&P.
In Clients & Profits 4.4 and Clients & Profits
PLUS, the "jump start" utility must be used correctly.
(An invoice added through jump start does not affect the
general ledger. It is necessary to do a journal entry IN
THE SAME AMOUNT as the invoices added through jump start.
Also see the manual section on jump start.
Clients & Profits Pro and Clients & Profits
Classic do not have a jump start utility. Instead, unpaid
beginning balance invoices are added by posting both the
debit and credit to the accounts payable account, which
nets to zero in the G/L. This is necessary to prevent
double counting, because you already established your
beginning A/P account balance via your beginning balance
journal entry. As well, if you don't use the accounts
payable account as the debit and credit accounts, when
you enter a check against these invoices it will debit
the wrong account (should debit A/P), and this will cause
the invoice balance to be reduced without reducing the
A/P account balance in the G/L. This will cause the two
to go out of agreement.
If your aging has never matched your Balance Sheet, then
your problem is probably caused by errors in your
beginning balances. Tip: Ask yourself which one was
correct: the unpaid vendor invoices, or the A/P total.
Then you'll need to add in the proper entries--either an
adjustment to the G/L or adding/deleting entries from
accounts payable--to make the balances equal.
(You may need to consult with your accountant for
guidance on what adjusting entries to make to balance the
account.)
The Vendor Aging and Balance Sheet are printed at
different times.
Both the Vendor Aging reports and the Balance Sheet
are up-to-the-minute accurate. This means they're always
showing the current balance as of the time they're
printed. So if you print an aging report on Monday, then
print the Balance Sheet on Tuesday, the data on the
reports may be out of sync--the aging report won't show
invoices posted on Tuesday.
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Tip:
Notice the run date and time of the aging and
balance sheet you are trying to balance. Is it
possible that transactions were posted between
printing the two reports? To make sure, reprint
both reports at the same time--then compare the
totals.
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Again, a way to avoid this issue is to just print the
A/P Quick Check, since by default it runs both at the
same time and prints it on one report for you.
As well, make sure you are NOT printing a prior period
aging. When reconciling your vendor invoice aging to your
financials, first reconcile the vendor invoice aging
through TODAY with your financials. Reconciling prior
periods is a much more difficult task and should always
begin anyway by first reconciling your aging through
TODAY to your financials.
There are entries in a month or period beyond the balance
sheet.
The vendor aging report shows all unpaid invoices,
regardless of date or accounting period. But the balance
sheet reflects only G/L activity to the A/P account
through the end of the accounting period for which you
are printing it. In theory, you could have G/L activity
to the A/P account in a period after which you are
printing it (even if the period for which you are
printing it is your latest period). C&P permits users
to post activity into future accounting periods, which
can be done accidentally, especially if future accounting
periods are not locked in Preferences.
Tip: To check for this, print a balance sheet for period
15 in Classic or period 24 in Pro--it will include all
G/L activity to the A/P account. If it is different from
this month's balance sheet, there are General Ledger
entries posted after the period you've been looking at.
Find these entries and move them appropriately to the
correct period in the General Ledger.
Again, a way to avoid this issue is to just print the
A/P Quick Check, since it includes by default all open
A/P invoices (regardless of their period or date) and the
A/P account balance through the latest period in your
version of C&P (picking up any entries in future
periods).
The age vendors first option was not selected when
printing the Vendor Aging, or the invoices weren't
aged.
The aging process calculates up-to-date balances based
on checks made to date. Any invoice that's paid is
removed from the aging report, and unpaid invoices are
aged based on today's date--so you'll know how long
they've been open. The age vendor first option performs
these calculations before the aging report is printed. It
ensures that your aging report shows only open
invoices.
Aging vendors first is built into C&P 3.x and
later, so this isn't a problem in these versions, since
all vendor balances are updated and all invoices are aged
by default. However, it is a good idea to print your
vendor invoice aging prior to printing the A/P Quick
Check, to ensure it uses the correct vendor totals.
A journal entry was made directly to the A/P
account.
Vendor and invoice balances increase when A/P invoices
are posted, then decrease when checks are posted (and
vice versa when unposted). The A/P account in the General
Ledger is updated in the same way. When you add a journal
entry directly to the A/P account, you're not affecting
the vendor balance or the invoice balance itself--which
makes your balance sheet and invoice aging not agree.
(For instance, if a journal entry is made to credit A/P
for $100.00, the general ledger will be $100.00 higher
than the vendor aging report.) For this reason, don't
make journal entries directly to your A/P control
account. If you need to adjust the A/P balance, make an
entry into accounts payable or checkbook.
You can utilize an Auditor utility called the A/P
Exception Report to find these. One of the areas of this
report prints any journal entries that used the A/P
account.
An A/P invoice was entered with an incorrect G/L
account.
A vendor invoice should credit the accounts payable
account and (usually) debit a job cost or expense
account. This will increase the A/P balance in the
General Ledger and add the invoice to your aging report,
keeping the two in balance. But if you add an A/P invoice
that credits any account other than A/P, the wrong
account balance will increase when it is posted. The A/P
total on your balance sheet will be less than the aging
total as a result of this transaction.
You can utilize an Auditor utility called the A/P
Exception Report to find these. One area of this report
prints any invoices where the A/P account was not
credited. As well, another area prints any invoices where
the A/P account was debited (since this should never
happen apart from your beginning balance invoices). It
does break out your beginning balance invoices (that have
a debit and credit to the A/P account) in their own
section, so you don't confuse these as invoices that
improperly used the A/P account. Do make sure all the
invoices in the beginning balance invoice section has a
date that reflects the time you started C&P. If one
has a later date, it could be a problem invoice.
A check was entered with an incorrect G/L account.
The same problem can occur with checks, too. A check will
debit the same account that was entered as the cGL on the
invoice it is paying. Therefore, if the A/P account was
not used as the cGL on an invoice it will cause the wrong
account to be debited on the check. The invoice will be
paid, so it won't appear on the vendor aging, but the A/P
account will not be debited in the G/L when the check is
posted. This will cause the vendor aging and your
financials not to agree.
You can utilize an Auditor utility called the A/P
Exception Report to find these. One area of this report
prints any checks that did not debit the A/P account. As
well, another area prints any checks that credited the
A/P account (since you should never credit this account
on a check).
An overhead check was added, but the accounts payable
account was used by mistake.
An overhead check in Clients & Profits programs does
not affect vendor invoices, only the General Ledger. So
if the A/P account is entered by mistake, its balance on
the Balance Sheet will be improperly affected. Overhead
checks should only credit cash and debit (normally) an
expense account--but not the A/P account.
An adjustment/discount was taken with a check, but the
accounts payable account was used as the adjustment G/L
account.
This situation applies only in Clients & Profits Pro
and Clients & Profits Classic. They have the ability
to track adjustments and discounts on checks, without
making complicated adjusting entries. An adjustment will
reduce the balance of an invoice on the vendor aging
report. The system will automatically debit accounts
payable in the amount of the adjustment. You should enter
the account to credit in the Distribute Check window
(usually a discounts taken - revenue - account).
If the A/P account is entered in the Distribute Check
window, Clients & Profits will debit AND credit A/P
in the amount of the adjustment. The invoice balance will
be reduced on the aging report, but the A/P balance in
the General Ledger won't be reduced by the same amount as
the total payment amount--causing your reports to be out
of agreement.
The accounts payable account was used when entering an
accounts receivable invoice or client payment.
The A/P account is appropriately used in Accounts Payable
and Checkbook only, and never used in Accounts Receivable
or Client Payments. A/R invoices and client paymentswon't
affect vendor invoices, so they won't update the vendor
aging, but they will affect the G/L, causing your reports
to go out of agreement.
Checks were purged then a verify/recover was run on
the vendor aging.
If checks are deleted from the database using the
purge utility, it is important to make sure that the
corresponding accounts payable invoices are purged at the
same time. You will know this happened because invoices
with old dates that you know have been paid will show up
on the aging. When you find these invoices, then choose
View Payments under the File menu, no payments will be
found.
If purging is not done correctly and a verify/recover is
run on the vendor aging, these old invoices will
re-appear as open. This is because the verify/recover
could not find any vendor payment to match to these
invoices. Therefore, to the system these invoices have a
balance due, that the verify/recover restores.
The solution is to enter a vendor credit to clear these
old invoices from the aging without affecting the G/L.
Enter a vendor credit against the invoice(s), one vendor
at a time, debiting and crediting suspense. (This nets to
zero in the G/L). Do not do this with actual unpaid
invoices. You won't be able to purge the old A/P invoices
once a balance has been restored, after running the
verify/recover, because the purge function has an
internal control feature to prevent the deletion of any
A/P invoice with a balance due.
SYSTEM ERRORS
The accounts payable account on the Balance Sheet does
not match the Audit Trail.
G/L accounts are updated only during posting. If
something goes wrong during posting, it's possible to
post invoices or payments that show up in the G/L without
updating the G/L account balance. It isn't at all
typical, but it can happen due to a network error. If so,
an account total on the balance sheet will not equal the
debit and credit journal entries in your General Ledger
for this account.
You'll know this problem has occurred after
printing the Account Totals Checker in the Auditor. It
will tell you if you need to perform a verify/recover on
the A/P account (which updates the account balance to
match the G/L detail for that account). It
provides instructions on how to perform a
verify/recover.
There is an out of balance journal entry in the
general ledger and the missing debit or credit is to the
A/P account.
If the posting of accounts payable or check is
interrupted for any reason, your general ledger could be
inaccurate. This problem can be located by printing the
journals for a particular month or period. Clients &
Profits Pro/Classic users can also find this by using the
Out of Balance Checker report in the Auditor. The
solution is an adjusting journal entry to restore the
missing debit or credit. You can utilize the Verify
feature on a particular reference number in the G/L by
clicking the green checkmark toolbar button. It will make
the necessary adjusting journal entries for you to fix
this reference number, then you only need to post them,
after checking their accuracy. You fix an out of balance
one reference number at a time per the Out of Balance
Checker report.
You can call Clients & Profits for more detailed
information on fixing an out of balance if you like. It
is important to handle the situation properly. In some
cases the balance sheet can be out of balance, but a
journal entry is NOT the correct solution. It could make
matters worse without your realizing it.
A vendor invoice should have a balance due or a
different balance, causing it to print with the wrong
balance, if at all, on the vendor invoice aging.
An invoice's balance due is calculated as it is posted.
It is the difference between the total of the invoice and
it's payments. At any time you can find an invoice and
choose View Payments under the File menu, then subtract
these from the total to arrive at the balance. If the
balance does not reflect this, then a verify/recover of
A/P Account Balances is necessary. Go to Setup >
Utilities > Verify/Recover, then choose A/P Account
Balances. There isn't a utility or report to tell you
that you need to perform a verify/recover, other than
checking one invoice at a time. Rather, you can print
your vendor invoice aging, then perform a verify/recover
on all A/P account balances (for all vendors), then print
the vendor invoice aging again and see if the totals
change. If they do, then you should be able to identify
the invoice balances that changed by comparing the two
vendor invoice agings
Note: Be aware, if you have purged checks at some time in
the past, make sure you also purged their respective A/P
invoices. If you didn't, a verify/recover of all vendors
A/P account balances will restore MANY old invoices to
your aging. Don't perform the verify/recover in this
case, except one vendor at a time to prevent this from
happening. Or, purge the A/P invoices as well, then you
can verify/recover all vendor A/P account balances.
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Tip:
In Clients & Profits Pro and Clients &
Profits Classic, the verify/recover A/P balances
has the option to verify one selected vendor--or
all vendors. Verifying one vendor is much
faster, if you know the vendor number that has
the problem.
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4/PLUS users only: This utility is called
verify/recover vendor, client agings. Note that it
affects both the vendor and client aging reports. Do not
verify accounts payable; this will not correct your
aging.
Posting A/P or Checks does not update the G/L
On rare occasion, posting or unposting invoices or checks will not
save BOTH the debits and credits to the G/L. This is the most difficult
system error to find when it happens. This is because it will not
show up on the Out of Balance Checker, the Account Totals Checker,
or the A/P Exception Report. The only indication that this may have
happened is your vendor invoice aging and the A/P account balance
no longer agree. If you have exhausted all other resources on this
tech note to find and fix the problem that caused your vendor invoice
aging and A/P account to go out of agreement, then finding non-postings
is worth looking into. Keep in mind this applies to both posting A/P
Invoices AND Checks.
Many software programs force you to print a
pre-posting report (proof list) and a posting report to
make sure they agree. C&P does not force you to do
this, but you can if you like. Print the proof list, then
after batch posting all entries, go to Accounting >
General Ledger and print the respective journal for that
this day and make sure they agree. To print the
respective journal click the printer toolbar button to
Print G/L Reports. Choose Journals, then choose the
appropriate journal. For the date range choose Date
Posted and enter the from and to date as the same day as
you did the batch posting. Compare this to the proof list
and they should exactly agree. If they don't, then a
posting error occurred.
If you did not do this, then you will need to try to find the non-posting
by comparing certain A/P and Checkbook reports to the G/L Audit Trail
for the A/P account. The following procedure is highly successful
in finding the cause of the disagreement between your aging and the
G/L, and often is the last step you will need to take to find the
cause. In theory, your sub-ledgers (A/P Invoices & Checks) should
always agree to the A/P account in the G/L (since these are the only
two areas that should affect your A/P account). With this truth in
mind, you can print reports from both A/P & Checkbook and from
the G/L for a certain date range and they should exactly agree. If
they don't then you have just isolated the time frame in which the
problem occurred. Then begin reducing the date range of these reports
and you can isolate a very small date range that is the cause of the
problem. Last, look at invoice by invoice and check by check detail
in the G/L to find the problem (doing this before limiting the date
range can take hours, if not days, so limit the date range first).
The reports you want to compare that should exactly
agree are these: From Accounts Payable choose to print
A/P Reports > A/P List by Date for a particular Date
Posted date range. Write down the total from this report.
Next go to Checkbook and choose to print Checkbook
Reports > Analysis > Checkbook Summary for the same
Date Posted date range. Write down the total amount for
those checks that debited the A/P account (not the total
of the entire report for this would erroneously include
debits to other account, such as those debits that come
from overhead or job cost checks). Net the two totals
together from the A/P and Checkbook reports and this
should be the net impact on your A/P account in the G/L
for this Date Posted date range. Now, go to the General
Ledger and choose to print G/L Reports > Audit Trail.
Enter the same Date Posted date range for All Periods. As
well, make the from and to accounts the A/P account (so
that only this account shows up on the report). Do not
sub-total the Audit Trail (leave this box unchecked). The
balance of this report should exactly match the net total
of the A/P and Checkbook reports. If they don't then you
know there was a problem within this Date Posted date
range. Attempt to reduce the problem date range even
further by doing the same thing with shorter Date Posted
date ranges. Once the date range is small enough,
research the detail invoice by invoice and check by check
to find the problem transactions.
Now you need to find the exact transactions that
caused the problem. To find them you first need to
understand that when A/P invoices post to the general
ledger they will always have an AP# prefix with the
invoice number following it. The same is true for checks,
except they have a CK# prefix with the check number
following it. Make sure each and every invoice and check
on your A/P and Checkbook reports has a matching
reference number in the Audit Trail. If one or more is
missing, you will need to add it manually via a journal
entry to the G/L. Make sure you use the reference number
C&P would have used if the posting was successful.
You may find AP# or CK# reference numbers in the Audit
Trail that are NOT in the A/P or Checkbook reports. This
can happen if an invoice or payment was unposted and then
deleted. C&P keeps the G/L detail so a proper audit
trail is maintained. Just make sure these reference
numbers net to zero for the A/P account.
You can see why users often print reports before and
after posting to make sure the G/L was updated properly,
and check the G/L after unposting to make sure it was
properly updated as well. It doesn't take much time to do
this, but can save you a lot of time in finding a problem
later down the road.
Note on System Errors: Please call Clients &
Profits if you find system errors occur on a regular
basis. They are always caused by network or database
problems. Nothing in C&P tells it to mispost, rather
the network drops the command C&P sent to the server
or the database is damaged keeping the G/L file from
being updated properly. We at C&P may be able to help
you troubleshoot your network and give you some steps to
try to help minimize or end the problem.
IMPORTANT CONCEPTS
Should I "plug" the A/P account to make it
balance to the aging?
We at Clients & Profits will never tell you to plug
your A/P account. By this we mean to add a journal entry
without using the methods described in this tech note to
force the A/P account to agree to the total of your
vendor invoice aging. Rather, we will recommend finding
the source of the problem using the methods outlined in
this tech note and have you fix it accordingly. However,
if you and your accountant have exhausted these methods,
or don't want to spend the time to look into it further,
and the difference between your financials and aging are
immaterial, you can choose on your own to plug the
account. Normally this is done if you know the aging is
correct and the difference is immaterial. You then make a
balanced journal entry that debits or credits the A/P
account, with an offset to an account you and your
accountant decide on. Often it's retained earnings or a
misc. income/expense account. Again, C&P will never
recommend this, this is a choice you will need to make on
your own.
The total of your vendor aging report will always equal
all of the A/P invoices less all of the checks.
How an invoice appears or doesn't appear on the aging
report is simple: It appears if it has a balance due. The
invoice's balance due is simply the total net cost less
any posted checks. The verify/recover vendor agings
utility is equally simple: it matches up an invoice with
all of its payments. This includes every A/P invoice and
every check or vendor credit posted since you started
your database.
The accounts payable and check files keep a complete
history of every invoice and vendor check for reference.
Only a purge will decrease this history. Closing the year
does not delete any checks or A/P invoices--it only
deletes G/L journal entries. So entering an A/P invoice
or check is the only way to affect your vendor aging
report.
The General Ledger includes the total of everything
entered to the A/P account, from any source, whether
correct or not.
The A/P liability account in the General Ledger is
updated by entering an A/P invoice, vendor payment, --or
adjusting journal entries. (An entry from A/R or client
payments could also be posted to the A/P liability
account in error). To use Clients & Profits (or other
accounting software, for that matter) correctly, the A/P
liability account should be used in these cases:
1 To account for a beginning balance when you
first start your database.
2 As the credit account on vendor invoices.
3 As the debit account on checks.
Using the A/P liability account at any other time will
throw your vendor aging and balance sheet out of balance.
Therefore, if you print an audit trail of your A/P
account, you should only see the beginning balance entry
and reference numbers beginning with AP# and CK#. If you
see others beginning with AR#, PMT# or JE#, this normally
is a problem.
The G/L detail is rolled into the A/P account's
beginning balance when the year is closed.
If your problem is in your A/P beginning balance, and
you have already closed the year, then you will need to
restore the prior year's database backup, prior to
closing, to analyze the G/L detail behind the beginning
balance, since it no longer exists in a closed database.
This is important to know when looking at the reports
that cross fiscal years, as described below:
Useful Auditing Reports for Troubleshooting Aging
Problems
All versions of Clients & Profits provide ample,
detailed accounting reports to help audit your work and
troubleshoot any problems. Instructions for printing
these reports are found in your User Guide.
Audit Trials
The audit trail lists journal entries by G/L account.
They are printed from the General Ledger window. Journal
entries are selected by date and/or accounting period.
You can print activity for one account, all accounts, or
a range of accounts. The audit trail report sub-totals
entries by account number.
GL Journals
The G/L journals list journal entries by transaction.
They are printed from the General Ledger window. You'll
see each transaction's debits and credits, listed by the
order in which they were posted. Transactions are
identified by reference number. The reference number's
prefix (i.e., AR#, AP#, PMT#, and CK#) identifies the
transaction's source--that is, from where it was posted.
Manually posted journal entries have a user-defined
reference number. If a transaction is somehow out of
balance, you'll see it clearly identified.
Detailed General Ledger
The Detailed General Ledger report shows the period's
journal entries for each account number. For each account
you'll see its beginning and ending balances, plus each
debit and credit journal entry. The Detailed G/L report
is printed from Financials for one selected period at a
time.
Trial Balance
The trial balance shows the beginning, current, and
ending balance for each G/L account. It shows all
accounts, including balance sheet and income statement
accounts. This report is printed for one month (or
period) at a time. It will show each account's beginning
balance (carried forward from the previous month), the
total of all the month's journal entries affecting each
account, and the account's ending balance (which matches
the balance on the Balance Sheet).
- This report corresponds exactly to the Detailed
G/L. However, the current activity column shows only a
summary number, as opposed to listing each journal
entry.
Year to Date Trial Balance
The YTD trial balance shows the period balances for
all accounts for the entire year. This report shows the
beginning balance of each account at the beginning of the
year, a summary figure for each month or period, and the
year to date balance. It is like an "expanded" trial
balance.
Accounts payable Reports
Accounts payable reports show vendor invoices and
line items for any time period. The A/P List shows
invoices only, by debit account or vendor number, and
doesn't show billing detail. The A/P Journal shows
invoices in detail, complete with each line item's job,
task, and credit G/L account number. Invoices are grouped
by invoice number. The A/P Summary shows billing line
items by credit G/L account.
Client Payment Reports
Cash Receipts reports show checks and line items for
any time period. The Payment List shows payments only, by
debit account or vendor number, and doesn't show payment
detail (i.e., which invoices were paid). The Payments
Journal shows payments in detail, complete with each line
item's invoice number, discount, and credit G/L account
number. Payments are grouped by the vendor's check
number. The Payment Summary shows payment line items by
credit G/L account.
TROUBLESHOOTING
Below are some general guidelines to follow that will
help your vendor agings stay in balance with your General
Ledger.
It is always a good idea to compare the Vendor and Client
Account Aging balances with the Balance Sheet at the end
of each month. They should match. Mistakes are easier to
find if you can narrow down when they occurred. The
fastest way to do this is to print the A/P Quick Check in
the Auditor.
If you discover that the two reports don't agree, you'll
want to first verify the accuracy of the current aging
reports.
1 Are all unpaid invoices appearing on the
list?
2 Are there any invoices on the list that
shouldn't be?
3 After preforming a verify/recover on ALL A/P
account balances did my agings change?
Once you've made any necessary adjustments , you're ready
to audit the General Ledger.
1 Start with The Auditor reports. These are the
easiest and fastest reports to print and usually find the
problem
2 Print the A/P Exception report to look for user
errors with the A/P account
3 Print the Out of Balance and Account Totals
Checkers to look for posting system errors
4 If the problem is still not found, utilize
the other methods in this tech note
ADDITIONAL TROUBLESHOOTING TECHNIQUES
Sometimes it is helpful to use your prior period agings
to find the period your aging first went out of balance
with your financials. As mentioned before, it's always
good to first reconcile your aging through today to your
financials. The prior period aging can sometimes aid in
this by helping you isolate the time frame to research.
For example, if you haven't reconciled your agings to
your financials for 6 months (after reading this tech
note you will never do that again!) and you find they are
out of agreement, then you can print a prior period aging
for each of the last six months and compare it to the A/P
account balance from the balance sheet or trial balance
for each of those months to see when the A/P account went
out of agreement with the vendor invoice aging.
Another technique that can help you identify the
problem vendors, can be done if you printed to hard copy
an aging through today that you know agreed to your
financials at a certain time in the past (a prior period
aging that also agrees will work as well). Then you can
print an Audit Trail subtotaled by vendor for all periods
from the exact date you printed this historical aging
through today for the A/P account alone. This will show
you all activity to the A/P account subtotaled by vendor.
You can them compare your historical aging to the current
aging and note the difference for each vendor. By
comparing the difference on the audit trail to the
difference on the agings, you often can identify the
problem vendors. Those vendors where the net change on
the audit trail differ from the net change on the agings
are a problem. Then focus your attention on a detailed
analysis of those vendors. Keep in mind you potentially
could have entries to the A/P account that lack a vendor
code. To find these print an audit trail with the same
parameters, except don't subtotal by vendor. Make sure
the two audit trails agree in total, if they don't, this
means you have some entries to the A/P account that lack
a vendor code (which should never be the case except for
the beginning balance journal entry). To see the vendor
on an a debit or credit to the the A/P account, just
double click on a line item in the General Ledger that
references the A/P account.
On rare occasions you may be able to find the problem if
it's one invoice or payment that caused the problem by
performing a search by amount in the G/L. Go to the G/L
and click the find button and then choose to find by
Amount. Enter the amount in question and maybe you will
find the problem transaction!
Analyze your Suspense G/L account. Make sure the
Suspense account has a zero balance. If it does not,
print an Audit Trail for this account and fix the
reference numbers causing the balance. If any of them are
from A/P or Checks, this will help bring your agings and
G/L into agreement.
Last, keep in mind if you use more than one A/P
account you will need to balance the aging to the G/L one
account at a time. To print the aging for one account go
to Snapshots > Vendor Account Aging and click the box
to Sub-total invoices for one A/P cGL and enter one of
your A/P accounts. Repeat for the other A/P accounts. If
your agings in total agree to all the A/P account totals
in the G/L, but the individual agings don't agree to each
A/P account, then most likely when you paid one of the
invoices for a given A/P account you debited the other
A/P account.
TIPS FOR KEEPING A/P IN BALANCE
Once your aging reports and balance sheet are correct,
you'll want to take extra steps to make sure that they
stay balanced. Some suggestions:
- Compare the reports frequently. If you can narrow
down the period when the error occurred, it will save
time finding the problem.
- Print an audit trail for the Suspense account.
Transactions get posted to the Suspense account when
Clients & Profits doesn't recognize the general
ledger account number.
- Save your latest matching aging and balance
sheets. Save all A/P and checkbook proof lists since
the last time you balanced. This way you will always
have a clear record of what transactions have affected
your aging since you last balanced.
- Check your proof lists carefully before you post.
Make sure that each entry debits and credits the
proper G/L account. Print the respective journal in
the G/L after posting to make sure everything posted
correctly.
- Do not make journal entries directly to the A/P
control account. If for some reason you have payables
that are NOT entered through the A/P sub ledger,
establish a separate A/P control account. Such an
account may be called "Accounts Payable - Other."
- If you happen to have multiple A/P accounts for
your vendor invoices, balance one account at a time to
your fianancials.
