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GL Reconciliation show unexplained differences - HELP please!

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Kaylie Posted: Mon, Mar 9 2009 11:50 PM

Hi everyone,

This is my first post and it's a doozy.  I have just accepted an assignment to review the books, accounts and records of a law firm that had recently dissolved and to ensure that the one partner's new firm has new books and records properly set up.  I have discovered that the GL reconciliation report was never run during the 10-year life of the old firm, no manual comparison of the GL was made to subledgers/journals, and the GL reconciliation shows differences going back to 1999!  None of the differences have remained constant through the years either.  Normally, I would look to see when the books balanced last and work forward but this goes so far back!  Any suggestions? 

Many thanks in advance.

Kaylie Chow,
Expert Law Office Management Services,
Ottawa, ON
(eloms@look.ca)

Top 100 Contributor
Posts 32

This can be a real mission impossible task and there are so many things one would have to do.

Firstly I would find out if any entries were purged in PCLaw. If there are entries purged, this I believe can make things complicated. if no entries have been purged move on to the next set of steps that would include:

1. Run Veify Data Integrity and Rset Matter Balances tool in PCLaw and see if this fixes the problem. If not then

2. Run the G/L Statements for the control accounts and check if any journal entries were passed that were not supposed to be passed. Doing this check will rule out any "illegal" entries passed in PClaw.

3. Re-open closed months. You can do this 12 months at a time. While doing this keep checking the G/L Recon report as well comparing the balances manually.

4. When comparing balances manually, you would be running the client summarized balances for past end dates. when doing this do ensure that all inactive and archived matters are selected.

5. Check that the Opening balances were entered correctly.

Finally when evrything else fails you may have to bring in PCLaw tech suport to conduct an exhaustive review of the dataset.

If it is bookkeeping errors chances are it can be fixed but if it is technical issues only Tech Support can assist in fixing.

Best

Hassan

Hassan Maje Anjarwalla & Khanna PCLawPro Ver 9.10d, Accounting Method: Accruals
Top 500 Contributor
Posts 2
CMcD replied on Wed, Oct 6 2010 10:29 AM

The original post was for a closed firm.  I have just completed a G/L reconciliation for an active firm.  I would not recommended opening closed months to do adjustments, as this could involve amending tax returns etc.  Ten years of opening and closing months would also take some considerable time.

Run your G/L reports by year, six month, and month, to narrow when error occurred.  Do detailed G/L report for that month.  Located the posting error.  Do current time correcting entries to reverse the errors. 

Most times the error was not a wrong entry made, but a wrong method used (ie G/L adjustment instead of bank cheque).  Just do a reversing G/L adjustment and then use the correct method to complete the entry.  Has no effect on income/expenses, as the entries cancel each other.

For any entries that do affect income/expense, write off errors outside of tax amending period (ie beyond 6 years) to draw (as a unrecoverable loss/gain of partner).  

Use income or expense for other entries.  Under the accrual method of bookkeeping, the error (the event) was discovered and corrected now.  Check with an accountant re tax laws in your jurisdiction.

You may find a G/L reconciliation error with no G/L entries.  Try verify data integrity (make backup copy of data files before-hand).  If the error still remains, call tech-support.

Good luck.  Clyde

Operator of two businesses specializing in PCLaw bookkeeping and error correction

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