SUMMARY: Checking that the total of the vendor invoice aging through today agrees to the current A/P control account balance on the balance sheet is essential to maintaining accurate books in C&P.

See the tech note on reconciling prior period agings if this is your concern. However, the first step to reconciling the total of a prior period aging to the A/P control account balance for a prior period is to fix any disagreement in the total of the vendor invoice aging through today with the current balance in the A/P control account.

TIP: This procedure should be on the list of essential monthly procedures for all C&P accountants.

How to Check if the Total of the Vendor Invoice Aging agrees to the Current A/P Control Account Balance

Go to Accounting > General Ledger, then under the Edit menu choose G/L Tools > Auditor. Within the Auditor choose the A/P Quick Check, then click Start. This report shows if the vendor invoice aging total agrees to the current A/P control account balance on the balance sheet.

TIP: Before running this report, make sure the A/P account, under Setup > Chart of Accounts, is marked as an A/P control account. If there are multiple A/P accounts then mark them all as control accounts. This setting is at the bottom of the edit account window.

TIP: If two or more A/P control accounts are used, the A/P Quick Check will compare the total balances for all control accounts. To compare individual control accounts, this needs to be done manually by printing the vendor invoice aging through today for one account, then comparing this to the current balance of this account in the balance sheet. In the end, they should not only agree in total, but each account should agree individually.

General Overview

The only two procedures that should affect the A/P control account balance and the vendor invoice aging are: posting/unposting accounts payable invoices and posting/unposting checks applied to those invoices.

However, during these two procedures there are several ways in which the balances between the vendor invoice aging and the A/P control account can come to differ. These ways fall into two categories: user errors and system errors. User errors are misuses of the A/P control account that affect the vendor invoice aging or the A/P control account balance without affecting the other by the same amount. System errors are generally posting errors that a user normally can't control. C&P has troubleshooting tools to find and fix both types of errors.

Before You Begin

We recommend that the Steps to Fix below are only performed in the current year database. That is, periods 1-24, including the beginning balances (periods 1-15 for Classic edition). Any remaining difference on the A/P Quick Check after performing all the steps below then most likely was caused in prior accounting years. This remaining difference is addressed by adjusting the A/P control account balance in the current year database via a journal entry (see Step 7 below).

TIP: Another way to check if a prior accounting year contributed to the difference on the A/P Quick Check today is to run the A/P Quick Check in the backup database made before closing the year. If there is no difference in the prior year database, then the entire difference today was caused in the current year database.

TIP: If you are a new user to C&P, the possibility exists that the books were started with a disagreement between the vendor invoice aging and the A/P control account balance because the credit to the A/P control account in the beginning balance journal entry made to start your books in C&P did not agree to the total of the beginning balance invoices entered at that time (which should have debited/credited the A/P control account).

Steps to Fix a Disagreement Between the Total of the Vendor Invoice Aging and the Current A/P Control Account Balance

Below are the steps to perform in order to find and fix the problems that caused the total of the vendor invoice aging through today to disagree with the current A/P control account balance. The disagreement can be caused by multiple problems, so run the A/P Quick Check after each step. Stop once there is no longer a difference on this report even if further steps remain.

TIP: As mentioned above, if a prior accounting year is contributing to the difference today, then the goal after each step is to have the A/P Quick Check difference match the difference in this report from the prior year. The remaining difference from the prior year will be addressed via a journal entry (see Step 7 below).

Step 1: Vendor Totals Checker

Looking for: Incorrect Vendor Balances

Run the Vendor Totals Checker in the Auditor. The Vendor Totals Checker looks for vendors where the total of their individual outstanding invoices don’t match their total vendor balance.

How to fix: Run the vendor invoice aging through today. This report has a built in procedure that updates all the total vendor balances to match the total of the individual outstanding invoices for each vendor.

Step 2: Account Totals Checker

Looking for: Incorrect G/L Account Balances

Run the Account Totals Checker in the Auditor and fix any accounts that show up on this report. In particular, look for the A/P control account on this report.

How to fix: Perform a verify/recover on the A/P control account for all periods under Setup > Utilities > Verify/Recover > G/L Account Balances.

Step 3: Out of Balance Checker

Looking for: Partial Postings into the General Ledger

Run the Out of Balance Checker in the Auditor and fix any entries on this report. In particular, look for entries with AP# and CK# prefixes, as well as BEG BALN.

How to fix: Click the verify button on the reference number, then proof and post the entries made. If the BEG BALN reference number shows up, there is a chance the A/P control account balance did not properly close into the beginning balances when closing the year. Please refer to the tech note on fixing an Out of Balance for how to fix the BEG BALN entry.

Step 4: A/P Exception Report

Looking for: User Error Due to Misuses of the A/P Control Account

Run the A/P Exception report in the Auditor. Ignore the section at the bottom for Beginning Balance Invoices . Fix only those entries added in periods 1-24 (periods 1-15 in Classic Edition) of the current year database. If there are additional entries on the report from prior accounting years, they should be left alone.

TIP: There may some intentional entries that show upon this report that should also be left alone. Such entries were normally added to work around an issue in the C&P database. Determine this while evaluating each entry on the report for if and how it should be fixed.

This report is looking for two conditions. Places where the A/P control account was used where it should not have been used, and places where it was not used where it should have been used. Ideally, the A/P control account should only be used as the credit account on A/P invoices and the debit account on checks, as well as a credit account in the general ledger to the beginning balance reference number (BEG BALN).

This report breaks out the misuses of the A/P control account into sections, such as “Bad dGL on Checks”, “Bad cGL on Vendor Invoices”, or “Journal Entries to the A/P Control Account”.

How to fix: Find each record in it’s corresponding C&P window (Accounts Payable, Checkbook, etc.), then unpost it, correct the account used, then repost the record. If an invoice has been paid, first unpost the check (don’t delete it), then after reposting the invoice, repost the check. If a manual journal entry shows up on the report, make an adjusting entry to move the amount out of the A/P control account into the correct account if it’s determined the A/P control account should not have been used on this journal entry.

Step 5: Verify/Recover the Vendor Invoice Aging

Looking for: Incorrect Balances on Individual A/P Invoices

Print the Vendor Invoice Aging through today. Then go to Setup > Utilities > Verify/Recover and choose “A/P Account Balances” for vendor “ALL”. When this is done, print the Vendor Invoice Aging through today again and see if there were any changes. If not, then the individual invoice balances did not have a problem.

TIP: Because this procedure can take a long time to run, some C&P users find it useful to do this before and after analysis on a backup copy of their production C&P database. If they find there is a difference, and thus a verify/recover needs to be done on their production database on the server, then it’s done at a later time, normally at the end of the business day. It’s best to do this when users will not be posting A/P invoices or checks, which could impact the results of the verify/recover.

Step 6: Compare Reports between Accounts Payable/Checkbook and the General Ledger

Looking for: Posting Errors that Don’t Update the General Ledger

This step is in two parts. The first is to compare period totals in order to identify in which period(s) the posting errors may have occurred, and the second is to compare the item by item detail in the problem periods in order to find the individual entries to be fixed.

Compare the following reports using the same report parameters on both (see below):

1. A/P List in accounts payable reports to the Purchases Journal in general ledger reports.

Compare the total on the A/P List with the total “Out of Balance” amount at the bottom of the Purchases Journal.

2. Checkbook Summary in checkbook reports to the Cash Disbursements Journal in general ledger reports.

Compare the subtotal for the A/P control account on the Checkbook Summary with the total “Out of Balance” amount at the bottom of the Cash Disbursements Journal.

Parameters to use on the reports:

- The same date added date range for one period, beginning with the current accounting period. Then move back period by period. We recommend the date added date range begin one month before to one month after the period being compared. For example, if period 6 is June, then make the date added range May 1 through July 31. This is so an invoice or check is not accidentally excluded for period 6 that may have been dated in May or July (C&P doesn’t require invoice and check dates to match the month of their accounting period).

- In the general ledger journals, make the to and from account the A/P control account.

TIP: If vendor discounts were given on invoices, as reflected in the adjustment column on checks, then increase the subtotal of the A/P control account on the Checkbook Summary by this amount.

If the reports agree, then move back to the next period and compare the totals on these reports for that period. Once a period is identified to have a difference between the reports, then this indicates posting errors may have happened in that period. For that period, now compare item by item detail on both reports looking for the differences. There are typically three types of posting errors for which to look:

1. An A/P invoice or check that is not in the general ledger at all. For example, if check number 100 is in checkbook, there should be a corresponding entry in the general ledger with reference number CK#100.

How to fix: Unpost and repost the invoice or check. Click the verify button on the reference number in the general ledger now that one exists, then proof and post the entries.

2. If there are multiple debits and credits to the A/P control account for a given reference number this means this invoice or check has been unposted and reposted multiple times. In this case, make sure the reference number nets out to a credit to the A/P control account for an invoice and a debit to the A/P control account for a check. The reason to verify that it nets out is that it could be the unposting or the second or later posting that didn’t update the G/L at all, so just looking for the reference number to exist (1st condition) is not enough, it also needs to net out correctly.

How to fix: Click the verify button on the reference number, then proof and post the entries.

3. An AP# or CK# reference number exists in the general ledger, but there is no corresponding invoice or check in accounts payable or checkbook respectively. This condition is Ok and means the record was most likely posted, unposted, then deleted. The general ledger will not lose this history even though the record was deleted, but the activity in the G/L for this reference number must net to zero. If it doesn’t, then either the posting or unposting did not update the G/L.

How to fix: Click the verify button on the reference number, then proof and post the entries. C&P knows that if the source record is not in C&P that it needs to net this reference number to zero.

Step 7: Adjust the A/P Control Account Balance

Final Step

If a difference still exists on the A/P Quick Check after Step 6, then this implies that the remaining difference was carried forward from the prior year.

TIP: This can be confirmed by opening the backup database prior to last closing the year and running the A/P Quick Check in this database.

The remaining difference is best addressed via a correcting journal entry. This journal entry will increase or decrease the balance of the A/P control account with the offsetting side of the entry going to Retained Earnings. Most C&P users choose to post this entry into the beginning balance period, but sometimes for tax reasons or the like, this entry should be put in periods 1-12. Check with your accountant to confirm what period should be used.