LSL Webinar “Back to Basics | Mastering Accounts Receivable Reconciliations,” presented by myself and Samantha Asbra led you through what a reconciliation entails, a step-by-step approach to performing Account Receivables (AR) reconciliations efficiently and accurately each year, and best practices for documentation and audit preparation.
In case you missed it – this article will layout the blueprint for local government agencies to optimize their AR processes and ensure their reconciliations are (really!) reconciliations.
Embracing the Challenge of Accounts Receivable (AR) Reconciliations
Accounts Receivable (AR) reconciliations pose a significant challenge for local government finance departments. Accuracy is paramount, requiring meticulous attention to detail. Regular reconciliations are crucial for identifying discrepancies, preventing errors, and ensuring all receivables are accurately recorded. This process not only supports financial integrity but also facilitates informed decision-making and compliance with regulatory standards.
Blueprint for Year-End Close AR Reconciliations
The year-end close is a critical phase that demands a structured approach. Bookmark, save, or print this post as your step-by-step guide for year-end close AR reconciliations:
Please note: Steps or sequence of steps may vary by agency depending on policies and software.
- Review AR Aging Report: Identify and address overdue accounts to prevent them from becoming uncollectible.
- Evaluate Write-offs: Determine which accounts should be written off based on the AR aging analysis.
- Reconcile AR Ledger with GL: Confirm that all transactions are accurately recorded and comply with accounting standards.
- Document the Reconciliation: Keep a detailed account of the reconciliation process and findings.
- Resolve Discrepancies: Make necessary adjustments and collaborate with relevant departments to correct any issues.
- Ensure Proper Documentation: Attach supporting evidence for each step of the reconciliation.
- Review and Approval: Have the reconciliation reviewed and approved by the appropriate authorities.
Collaborative Efforts Between Departments
Effective AR management hinges on collaborative efforts and a robust collections policy. A unified approach minimizes errors and delays, enhancing financial operations. Establishing a comprehensive collections policy is pivotal, outlining procedures for overdue accounts and escalation processes, including third-party involvement if needed.
Conclusion
For local government agencies, mastering AR reconciliations is not just about financial accuracy; it’s about building a foundation of trust and accountability. By following these steps and fostering a culture of collaboration, agencies can achieve financial excellence and set the stage for future success. For best practices from the auditor’s perspective, check out ‘Through the Auditor Lens: Mastering AR Reconciliations for Year-End Close’.
