Tackling Subsidiary Reconciliation

By now, you are likely well into your fiscal year-end tasks. Reconciling your subsidiary modules to General Ledger is a big-ticket item everyone likes to cross off their list. This process involves running, at least, two reports and comparing balances. Our Article titled “How to reconcile to General Ledger” outlines which reports to use for each subsidiary ledger and outlines not only common causes, but how to troubleshoot the differences. I highly recommend first starting by reviewing the Article to ensure your reports are set up appropriately as well as to review the most common causes of discrepancies to see if any of the listed reasons apply.

Accounts Payable is the most commonly reconciled subsidiary module. For this module, we recommend running the Open Invoice Report, set up as outlined here, and comparing it against the General Ledger Report, set up as outlined here, for the same reconciliation period. It is crucial that our set up for the Open Invoice is set up to base invoices open date on Post Date since the General Ledger only recognizes Post Date. This way, it will be comparing apples to apples.

More often than not, when we see discrepancies it is due to date issues where the transaction date does not equal the post date and you are running a transaction date based report in the submodule (e.g. Aged Reports). You will only be able to accurately report within a submodule based on transaction date IF your transaction date equals your post date in ALL transactions.

It can be overwhelming when you see an out of balance. My go-to steps are as follows:

1. Confirm my reports are set up correctly.
2. Find a starting point. When were you last in balance? Run reports back in time until you find that point and move forward from there one month at a time.
3. Look for manual journal entries to the summary account. These do not get communicated back into the submodules.
4. Check for unposted / do not post transactions during your reconciliation period.
5. Check for payments with different pay and post dates.

Running the reconciliation reports periodically from your last in-balance period will allow you to tackle one cause of discrepancy at a time. The system also has some General Ledger Business Rule options that may alleviate headaches during reconciliations:

1. In Configuration, Business rules, Highlight Transaction mark the box “ Do not allow post dates to be different than transaction dates in other Blackbaud systems”
2. Mark the Box “Do not allow Default account to be edited or used as the primary account in other Blackbaud systems”
3. Highlight Journal Entry, Change the drop down menu for “Allow manual journal entries to Blackbaud System default Summary Accounts” to either “Ask each time” or to the recommended setting “Never”

For more information regarding subsidiary ledger reconciliation, view our Subsidiary Ledger Reconciliation Guide (pdf).