The process of reconciling individual residents’ account balances with the general ledger ensures accuracy of the balance sheet assets. The timing of receivables is significant to the facilities’ cash flow.

The reconciliation should be done as part of the month-end closing process.  When a formal reconciliation process is followed then proper documentation will be available for an audit, if needed. If differences are found between the Accounts Receivable (AR) Detailed Aging and the General Ledger (GL), then adjustments or corrections can be made prior to closing the period.

• Before beginning the reconciliation make sure all transactions are recorded for the period and that all the subsidiary ledger balances have been posted to the general ledger.  The detailed listing of unpaid resident balances will be in the AR Aging report.  This report should be run as of the last day of the reporting period.  The totals on this report are then compared and reconciled to the receivable total in the general ledger report, run with the same period-end date.   
• Differences between the two amounts may be discovered, and these variances must be investigated.  The most common reason for a variance would be a journal entry that was made to the general ledger account that was not reflected in the detailed subsidiary ledger.  Other possible reasons are differing cutoff dates on reports or posting to the wrong general ledger account.
• Once variances or errors are identified, adjusting entries should be made as needed to reconcile with the correct balances. Best practice dictates that when possible, it is best to reverse the incorrect entry and then re-enter it in the correct manner.  After corrections are made, complete a new reconciliation balances as a final check before closing the period.

The account reconciliation process itself should be reviewed and improved upon on a regular basis. Use of standard templates can help provide consistency. Review of reconciliation procedures should answer the questions of “Who? What? When? Why?  and How Much?”

Effective tools and processes provide the basis for accuracy, quality and completeness for a successful financial close.