Month End Close and Audit Procedure · End Date you used for your owner statement printing (as well...

Month End Close andAudit Procedure

Month End Close and Audit Procedure

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Month end close and audit procedures:1. Ensure that payments received and credit card transactions posted in the current month

have been deposited and settled to the Trust Bank Account.

a. Open the Add Payments to Bank Deposit dialog from Accounting>Banking>BankDeposits. Select the appropriate bank account in the Bank Account filter. Click+New Bank Deposit and +Add Payments. Enter 1/1/2000 in the Start Date andthe last day of the month you are closing in then End Date field. Click the Searchbutton. There should be no entries in the dialog. If there are, research yourdeposits and apply the existing entries in the appropriate (or new) deposit slipusing a deposit date for the month of the transaction.

b. Open the Add Transactions to Settlements dialog fromAccounting>Banking>Credit Card Settlements. Click +New Settlement and +AddTransactions. Select the appropriate merchant account in the Merchant Accountfilter. Enter 1/1/2000 in the Start Date and the last day of the month you areclosing in then End Date field. Click the Search button. There should be noentries in the dialog. If there are, research your settlements and apply theexisting entries in the appropriate (or new) settlement batch using a depositdate for the month of the transaction.



c. Run the Accounting>Reports>Banking>Deposit Detail report for the closingperiod. Ensure that all transactions deposited or settled are in the currentmonth. If an individual transaction doesn’t match the month/year of the depositslip or settlement batch, move that transaction to the appropriate month usingthe Bank Deposit or Credit Card Settlements programs.

d. Ensure the starting and ending balances for the closing period of GL 1000 and GL1100 are zero. Any balance for these dates will prevent you from balance yourbank account to your monthly bank statement. For example, the 8/31/13transaction in the Deposit Ticket JE 0026410 shown above will appear as abalance forward amount because the transaction was posted in Escapia inAugust, but not deposited until September. If included in the Septemberdeposits it will not appear as a deposit in transit, which it should.



2. Verify that Security/Folio Deposit Refunds have been fully processed.

a. Run Accounting>Reports>Accounts Payable> Security Deposit Refund Report toensure that there are no outstand refunds due (optional since month end closedoesn’t require you to make refunds).

b. Check that there are no hanging entries in the Accounting>AccountsPayable>Pay Refunds. If transactions exist for the closing period, post thosetransactions via this program.



3. Check the color codes on the Reservation grid to ensure all bookings have been paid infull. A green color code on the reservation grid shows that an individual booking is fullypaid. First Night, Last Night, and Departure day booking methods require payment infull before a booking will appear on the Revenue Processing screen. Partial Period andPayment Method bookings may appear as yellow bookings on the Reservation Grid eventhough payment has been received for the current period. You must open the folio onthese bookings to ensure that payments have been received for the current period. Youmust follow up on bookings which appear in Red or Yellow on the grid. It may be that apayment was received but not entered in Escapia, or, the required payment was notactually received. Bookings with payments not received cannot be processed.



4. Run the Accounting>Processing Booking Revenue program. In order to post rents, taxon rents, commissions and other owner contract charges you must run the ProcessingBooking Revenue program.

a. Choose an appropriate Processing Method according to your default methods(First Night, Last Night, Departure Day, Partial Period, or Payment Method). Youmay have multiple processing methods so be sure process for each method youuse.

b. Enter the first day and last day of the month you are closing in the Period Startand Period End date filters. This will select all fully paid, unprocessed or partiallyprocessed bookings in the results list.

c. Only use the “Set a manual processing date” checkbox and “Processing Date”filter if you have a specific reason for doing so. For example, a prior monthbooking may not have been fully paid until the current month. You would usethe manual processing date to process this booking in the current month—otherwise, if posted in its default month; your current owner statementbeginning balance will not match the ending balance of the prior month’s ownerstatement.



Click “Next”

5. Run the Accounting>Processing Service Order program. This will post service ordercosts to Unit/Owners or Guest/Tenants. Process all service order costs which shouldappear on current month owner statements.

6. Set End Date to last day of closing period and click Next



7. Ensure Recurring Charge Templates have posted. Check the Last Posting Date and NextPosting Date for all active templates.

8. Review the Charge History tab of the Recurring Charge Template and spot check chargesfor the current period. There may be some charges for units no longer on your programor who have declined a specific service. You can use this tab to reverse or removeincorrect charges. Missing unit charges will need to be posted via General JournalEntries.



9. Run Accounting>Statements>Generate Owner Statements to create preliminary ownerstatements. You should print hard copies and review them prior to creating ownerpayments for the period you are closing.

10. Set the Start Date and End Date fields to the first day and last day of the month you areclosing. Click next. (Note: you can ignore the “process date” filter.)

11. Select all owners and click the Generate button.



12. Click the Print button.

13. Click the Printer Icon to print hard copies of all statements. When completed print the“Unsuccessful” button since these are preliminary statements and will need to bereprinted after checks have been cut.



14. Review each owner statement for accuracy. Where there are errors, make correctionsbefore paying owners.



15. Run Accounting>Accounts Payable>Pay Owners

a. There are three date filters for which it is important that you understand howthey work.

i. Processing Date – this date should always be set to the End Date youused for your owner statement printing. It should normally be the lastday of the month. This date is used to calculate the sum of alltransactions for each owner through the processing date.

ii. Billing Date – this is the date that will appear on the “auto payable”transaction posted to the owner ledger. This date should also match theEnd Date you used for your owner statement printing (as well as theProcessing Date described above).

iii. Posting Date – This is the date that will appear on the check or ACHpayment made to each owner. It should normally be the date youactually print the payment.

b. Click the checkbox next to each owner’s name to select who will be paid.Normally you will want to accept the default amount showing in the Amountcolumn. This is the Balance of each owner account (the Balance Column shouldtie to each owner’s preliminary statement ending balance) less the WorkingCapital target amount in the next column. This will “leave” the working capitaltarget balance in the owner’s ledger. Click the Generate Payments button.



16. Print Owner Checks from the Print Checks program. If no errors were encounteredfrom generating the checks you will be automatically sent to the Print Checks program.If there were errors you will need to access the checks via the Accounting>Banking>Printchecks program.

a. Print checks allows you to select a bank account and whether to print non ACHEnabled checks or run an ACH Enabled batch (which will create a text file whichneeds to be transmitted to your bank). You also have the option to verify and/orchange the starting check number. Select the appropriate checks and click eitherthe Create ACH File or the Print Selected Checks button.



17. Print “Final” owner statements with Accounting>Generate Statements>OwnerStatements.

a. When final Owner Statement printing is completed you will have the opportunityto Email, Save, Publish, and/or Mark as Reconciled. This can be accomplishedeither in Step 3 of the Generate Owner Statement wizard or from the ManageOwner Statements program. It’s always a good idea to review final ownerstatements prior to completing the above step.

b. When final statements are printed, verified, and processed you should stuffenvelopes with the monthly owner statement and check (when not emailed orrun as an ACH Payment).



18. Pay the Property Management Company and Vendors using Accounting>AccountsPayable>Pay Open Items. Note: it is best to pay the property manager and vendorsAFTER running owner statements since you will be verifying the values on the ownerstatements. This allows you to find and correct revenue processing and expense postingerrors prior to their being paid out. You often cannot make corrections after you havepaid vendors or the property management company.

a. When paying the property management company it is recommended that youchoose the Pay Everything option for the month you are closing. Paying selecteditems will result in printing multiple checks and possible commingling of trustfunds if you do not include the negative transactions along with the positivetransactions. It is also recommended that you print the Accounting>AccountsPayable>AP Due Report prior to selecting transactions for payment. This reportwill allow you to review which transactions are scheduled to be paid andprovides a list of aged invoices as well as a summarized list of GL Accounttransaction totals.

b. The recommended filter settings are shown below. It is recommended that youfirst select the Review and Select option—especially if you haven’t printed andreviewed the AP Due Report. Enter the last day of the month you are processingin the Items Posted as of filter.

c. The Only pay up to owner balances checkbox is extremely important. It is usedto prevent commingling of owner trust account funds. When checked (which isthe default value) owner balances are checked to see if payment of theexamined invoice will cause the owner to have a negative account balance. If itwill, that invoice will not be selected for payment to the Vendor or PropertyManager. This maintains sufficient funds in the Trust Bank Account to cover allliabilities. If this checkbox is unchecked, all selected invoices will be paid out tothe Vendor or Property Manager regardless of the owner’s ledger balance.

d. The Items Posted As of and the Items Due as of dates are used in the invoiceselection process. It is recommended that you use the Items posted as of date—especially when paying the Property Management Company. The Posting Dateserves as both the date the invoice was paid as well as the check printing date.Again, it is recommended that you use the last day of the month you areprocessing for these date filters.



e. Click Next and for the Property Management Company select Pay Everything.For other vendors which have less than one page of transactions, it’s ok to selectindividual invoices. If more than a page, it’s recommended to select PayEverything.

f. Make sure Processing Date and Posting Date are correct, select appropriate BankGL account, and determine whether you want to print an actual check or createa non printing check. Then click the Pay Now button.



19. Print the Property Manager and Vendor Checks. If now errors were encountered in the“Pay Now” process the Print checks program will automatically open.

a. Select the checks you wish to print and ensure that the correct starting checknumber appears in the First Check # then click the Print Selected Checks button.

20. Immediately after printing a Property Management check you should run theAccounting>Reports>Accounts Payable>Business OIAP Check Distribution Report.Export the report to an Excel spreadsheet and give the check and spreadsheet to your“operating account” bookkeeper. Deposit the check into your Operating bank accountand enter the GL offsets from the Business OIAP Check Distribution Report to your“Operating books”. If you are using Escapia as a subsidiary ledger for a legallyestablished Trust Account, these are usually the only transactions you need to enterfrom your Escapia books to your Operating books. (e.g. QuickBooks or other financialaccounting software).



21. Prior to printing checks to occupancy and sales tax entities you should print theappropriate tax reports best suited to helping you complete your individual tax returns.These reports may be found under Accounting>Reports>Tax. There are a variety ofreports and you should examine all of them to determine which reports best fit yourneeds. Most users are able to complete their monthly tax returns with the informationprovided in the Tax Audit Report or the Tax by Tax Entity Report. The Tax Audit Reportprovides detailed tax information for which it is sometimes necessary to download intoExcel and requires spreadsheet manipulation to provide the correct Unit and tax entitytotals. The Tax by Tax Entity, Tax District, and Unit Occupancy Tax may be better atproviding unit/owner breakouts if you must submit name and address information fortenants, units or owner information. The Occupancy Report is also found in theAccounting>Reports>Tax submenu. This report provides occupancy information by unitfor any starting to ending dates you may need to complete your tax returns; however, itdoesn’t provide rent or tax dollar amounts.

22. How your Tax GL accounts have been set up during the install process determines howyou will pay your tax entities. If your Tax GL accounts have been set up as “General”type GL accounts, you will need to use Enter Bills to transfer taxes collected totals fromyour Tax GL to your Tax Vendor Accounts. If your Tax GL accounts have been set up as“Vendor” type GL accounts it is not necessary to transfer the funds from the Tax GLaccounts to vendor accounts as this will have occurred automatically when revenue is



processed. Tax Vendors will be paid using the Accounting>Accounts Payable>Pay OpenItems program.

a. You should always compare your Tax payment totals to your tax vendor to yourindividual tax reports and tax returns. If you receive a credit from your tax entityfor timely payment of submitting tax returns and paying your taxes, you shouldenter an invoice from the Business to the Tax GL account which will reduce yourtax payment and provide income to the property management company. Thiscan be done via Enter Bills.

b. Tax payments are often required on either a monthly or quarterly basis and aregenerally paid in the month following your accounting close.

23. Run recommended month end Audit Trails and Reports (listed below). While it isprobably a good idea to run a main set of audit trails prior to doing a bank reconciliationas soon as possible after completing final owner statements and property managementcompany payouts, it is usually best to print and retain required reports AFTERcompleting your bank reconciliation (step 17). This will ensure that the reports are upto date and are not made obsolete due to errors found and corrections made during theBank Reconciliation process.

24. Perform Accounting>Banking>Reconcile Bank Account

a. Usually done mid month as soon as possible after statement has been received.Use the bank reconciliation program to verify that the Escapia trust bank accountbalance ties to an outside source—your monthly bank statement. The processshould be completed for each bank type GL account in Escapia.

b. Mark appropriate Deposit, Settlement, Check, and Adjustments as they appearon your monthly bank statement.



c. When all items on monthly bank statement have been accounted for in theEscapia Bank Reconciliation, print the Bank Reconciliation Report using the PrintReconciliation Sheet link on the Reconcile Bank Account program.



25. The final step for a Month end processing is to set the Accounting Close date in theClose Account Period field in the Accounting>Setup>General Accounting Setupprogram. You must have AccountingManager or higher permissions to enter or edit thisdate. Setting a date in this field will prevent users from changing existing transactionsor entering new transactions with posting dates on or before this date.



Reports and audits

Save aptly named electronic copies to disk—set up a set of folders for accounting periods andback this up

Audit Trails

Reports> Banking Menu

1. Trust Reconciliation Report: This report should be run for the accounting period. Check thebottom of the report for out of balance notice. Individual subledger balances should be checkedfor reasonableness. Enter month end G/L account totals into spreadsheet used to post balancesheet entries to operating account (optional—the accounts you post should be recommendedby your CPA). Save the spreadsheet to audit folders as well as hard copy.

2. Bank Register: Provides running trust account balance in chronological sequence. Listsindividual bank deposits and checks. Compare last month report’s ending balance to currentmonth beginning balance. (You may want to set up spreadsheet schedules for these month tomonth comparisons).

3. Credit Card Transaction Detail: Can be exported to Excel 1 line to sort by CC type.

4. Deposit Detail Report: Provides daily deposit and credit card settlement details.

5. Bank Reconciliation Worksheet: Run after monthly bank reconciliation has been completed.This report provides the details for 10 of the 11 elements on a bank reconciliation—BeginningBalance, Deposits, Disbursements, Book Adjustments, Reconciled Deposits, Reconciled Checks,Reconciled Adjustments, Deposits in Transit, Outstanding Checks, Outstanding BankAdjustments. Saving this worksheet can help you determine if changes have been made to yourbank account to prior accounting periods.



Reports> Accounts Payable Menu

1. A/P Payments (Check Register): Lists individual checks in date/check number sequence.

2. Business OIAP Check Distribution Report: Lists the accounting distributions for eachpayment made from the trust bank account to the property management company. Use thisreport to provide Operating Account posting details.

3. Generate Bills Detail Report (for Legacy (non OIAP) users only): Provides details behind theGenerate Bills program.

Reports> Accounts Receivable Menu

1. Payments Audit: Provides details on original posting of funds to G/L accounts 1000, 1100,and 1200.

Reports> Owners Menu

1. Owner Balance: One line per owner at period ending date.

2. Owner Ledger: Provides transaction details for monthly owner transactions.

3. Owner Unpaid Bills Report: When used in conjunction with the Owner Ledger Report, thisreport adds back “vendor unpaid bills” to the Owner Ledger. This report provides a means ofproving that trust bank account commingling has not occurred for specific owner ledgers.

Reservation Activity Reports (choose best report according to your preference)

1. Booking Summary Report (Reservations Report Menu): Provides booking totals on a bookingby booking basis. Has various sort and filter options.

2. Reservation Activity Report (Accounting Reports Menu): This report lists bookings groupedby reservationist. Can be used for reservationist commission calculations. Has various sort andfilter options.



3. Various reports for determining Booking Charges, Folio Balances, Management Fees, andOwner “booking” charges: You should review these reports to determine if any provide auditdetails that you need to retain. They are more often useful as management reports.

Reports> Tax Menu

1. Tax Audit Report: Ties to 2500.xxxx G/L accounts. Can be sorted in various ways. Ties toreservations but does not provide occupancy details.

2. Booking Tax Report: Ties to Booking details. Provides occupancy details. Excel version maybe used to include or exclude bookings in the appropriate accounting period.

3. Various optional reports to provide guest, owner, and unit back up details on occupancy taxreturns: Tax by Tax Entity Report, Tax District Report, Unit Occupancy Tax Report, andOccupancy Report.

Reports> Transactions Menu

1. Transaction by Account Report: Lists transaction detail by G/L accounts. Note that thisreport does not provide monthly beginning balances—MTD totals only.

Reports> General Ledger

1. General Ledger Report: Lists transaction detail by G/L accounts. This report does providePeriod Beginning Balances, MTD totals, and Period Ending Balances. This report may be used toenter balance sheet entries on CPA provided working spreadsheet.

Reports> Trial Balance Menu

1. Summary Trust Reconciliation Report: Provides similar information to the TrustReconciliation Report but in a summarized format that is better formatted for comparingSubledger Entity Totals to Bank totals. You can substitute this report for the Trust ReconciliationReport.



2. Separate Beneficiary Report: Provides the detailed transactions for each subledger. Thisreport is often required by auditors to prove trust to bank reconciliations.

3. Business Summary Trial Balance: Provides a summary trial balance for all PropertyManagement GL transactions. There are two reports in this category—a monthly report and a“drill down” report for all accounting periods. The “Monthly By Year” report option isrecommended since it provides valuable month to month comparisons in a summarized format.This report provides an accrual basis report for all Property Management GL accounts.

4. GL Summary Trial Balance: Provides a summary trial balance for all GL transactions. Thereare two reports in this category—a monthly report and a “drill down” report for all accountingperiods. The “Monthly By Year” report option is recommended since it provides valuablemonth to month comparisons in a summarized format. This report provides an accrual basisreport for all Escapia GL accounts.

5. GL Detail Trial Balance: There are two reports Monthly and YTD. The YTD report provides abeginning balance for each GL Account as of the Report Start Date. The MTD report doesn’tprovide a beginning balance for each GL Account. These reports may replace the Transaction byAccount Report or the General Ledger Report as monthly audit trails.

6. Management Reports: Other reports not listed above should be considered managementreports and should be run on an “as needed” basis.

Month End Close and Audit Procedure · End Date you used for your owner statement printing (as well...

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