Proofing the Ledgers

I want to verify that my ledgers are in balance. How do I do that?

You need to run several reports to determine if you are in balance. There are three types of tables you must consider when balancing: balance, detail, and subledger. The number of reports you need to run is contingent upon the way you have chosen to set up your organization. We are very flexible in terms of organization setup and fiscal year status, so you must carefully consider how the following recommendations apply specifically to your organization.

You are required to have a G/L segment. You may only have one Fund segment, but it is not required. You are allowed one or more optional Balancing segments. You are also allowed to have Non-balancing and Restricted segments. We will not discuss Non-balancing and Restricted segments, since you are not required to balance by these segments. You can leave years open indefinitely or close a fiscal year any time you want.

For each segment type that requires balancing (G/L, Fund, and Balancing), and for each fiscal year you must be in balance by all three types of tables (balance, detail, and subledger). If you own the A/P or A/R modules, you will need to tie your subledger account balances to Trail Balance amounts and General Ledger detail report balance amounts. In order to proof your ledgers, you will need to run the following reports:

  • Trial balance by Fund
  • Trial balance by G/L
  • Trial balance by Balancing segments
  • Trial balance including all segments
  • Posted G/L transaction report by session ID
  • Unposted G/L transaction report by session ID
  • Summary A/P ledger report
  • Summary A/R ledger report
  • Standard G/L including all segments

Some of these reports may not apply to some organizations. Consider your organization's segments and owned modules when determining which reports to run. For the purpose of this topic, we will assume you have A/P, A/R, and the following segments: G/L, Fund, and one Balancing segment. We will also assume you are proofing only the current fiscal year. Remember to save the report definitions you create for future use.

For the first set of reports, we recommend the following report setup. Go to Reports>General Ledger Analysis>Comparative Trial Balance. Create a new report. For your date parameters, specify "This Year" as your "Current Period Dates." Specify the "Account Balances Begin" date as the first day of your oldest open fiscal year. Specify the "Current Reporting Year" date as the first day of the fiscal year for which you are running the report (in this case, the current fiscal year). Use "Fund Code" for the first column in the report body (thereby making it the primary sort). Make "Begin Year Balance" the second column and "Current Balance" the third column. Use no filters or groups on the report. Make sure that the Options tab has "Year-End Adjustments" selected. You can verify that you are in balance by fund if the total for each fund is zero. Next, run this report by your Balancing segment by replacing the Fund segment code with the Balancing segment code and keep the other parameters constant. Verify that each of the codes total to zero. Then, replace the Balancing code with the G/L code. Verify that the report total is zero. You have just verified that your balance tables are in balance by all applicable balancing segments, including Fund and G/L, for the current year.

If your organization has additional open years, or if you report on prior closed years, it is recommended that you run this series of reports for each fiscal year individually. Using these reports, you can verify that your balance tables are in balance.

Remember to compare the "Begin Year Balance" column of the year you are examining with the "Current Balance" column of the prior fiscal year to insure the correct balances are rolled forward.

Next, you will want to use the Reports>Transaction Reports>Posted General Ledger Transactions and set up a new report. Include "Session ID" as the first column in the report body, along with "Debit" and "Credit." Use no filters or groups on the report. Make sure that "Summarize Amounts" is checked on the Options tab. This report will show every batch in the system, whether user-generated or system-generated. Make sure that each individual session totals to zero, which signifies that the session balances. Now generate an identical report using Reports>Transaction Reports>Unposted General Ledger Transactions. Confirm that each individual session totals to zero. You have just verified that your posted and unposted detail tables are in balance.

Finally, you will want to run reports to verify that your subledger(s) are in balance with your balance tables (Trial Balance report) and detail tables (Standard G/L Ledger report). These guidelines apply to both your A/P and A/R subledger accounts. Whether you have one or many, you need to proof each subledger account individually.

Open the appropriate summary ledger report (A/P or A/R) and specify the same fiscal year date range as the trial balance and general ledger you will be using as a basis for comparison. On the Content tab under "Items by Page", select G/L Code. Under "Report Body", select Fund Code and the balancing segment, in that order. Then add "Current Balance." Do not use any filters or groups. Make sure that "Include Year-End Adjustments" is checked on the Options tab. The report will have a header that indicates the appropriate subledger G/L account number. Compare the current balance for each account code combination on the subledger report with the comparative trial balance report and the standard G/L report, which you will run using the same date parameters. These amounts should be identical between reports.

Open Reports>General Ledger Analysis>Standard G/L and create a new report. Set the "Account Balances Begin" date as the first day of your oldest open fiscal year. Then set the "Current Reporting Year Begins" date as the first day of the fiscal year you are reporting on (in this case, the current fiscal year). Set the "Current Transaction Dates" to "This Year." On the Content tab, include G/L Code, Fund Code, balancing segment code (in that order), along with Debit and Credit. Do not use any groups. You can filter for G/L Code = the specific A/P or A/R general ledger code or range of codes (if they are sequential), but include no other filters. Make sure "Include Year-End Adjustments" is selected on the Options tab. Run the report for all your A/P and A/R subledger accounts. After finishing the G/L report, run a comparative trial balance that includes the same segments you used in the G/L report. Run one of each of these reports for each fiscal year you want to proof. Make sure your dates correspond on reports you are comparing. You now have the reports necessary to verify that your subledger tables are in balance with the detail and balance tables.

Use the above guidelines to create report definitions that you can use both now and in the future as tools to proof your ledgers. It is recommended that you proof your ledgers on a regular basis, in conjunction with frequent, regularly-scheduled backups. Remember to run trial balances for each G/L, Fund, and/or Balancing segment. Your goal is to be in balance for each fund code, balancing segment code, and for the G/L segment. While there may be some out-of-balance conditions that can arise in your data that cannot be deduced from these reports, they will not be covered here as the explanation and resolution of the circumstances is too complicated to handle in a few paragraphs. Follow a strict backup schedule and archive your backups. Remember, if you have entered enough data to warrant a backup, BACK IT UP! One day that backup may save you a lot of work.