Affinity Consulting Blog


Is it really December already? This year has flown by and with the upcoming holidays, there will be no slowing down for most of us. And even though there is a lot to accomplish, it is important to focus on the End of Year (EOY) review in your time, billing and accounting software.

While it is always a best practice to implement monthly procedures, the fact is it's December and here we are! Don't wait until January or February to review and cleanup 2014; in the long run this will take a lot more time. With everything in order, there’s no last-minute rush trying to get advice from your accountant, or paying excessive fees for hour-intensive catch-up work.

Here are our recommendations to start the EOY review now:

  • Ensure bank reconciliations are up to date on all accounts. It is critical the bank balances are accurate when considering year-end expenditures and bonuses.

  • Void stale dated checks before the final 12/31/14 bank reconciliations - The rule is to void it if it is older than six months, and you may need to research any client related checks, particularly if the check should be reissued to a payee or refunded to the client. Void any outstanding receipts; the only outstanding receipts should be dated the last few days of the prior month.

  • In preparation for preparing 1099s to Vendors, review Vendor information and obtain missing W-9 forms so you have the correct mailing address and tax ID. In PCLaw, review the Vendor Listing report to review if they are set to receive a 1099 and if the tax ID is missing. In Tabs3 review the Vendors in Accounts Payable and the Payees in Trust Accounting.

  • Review stale trust balances for matters - In PCLaw, the Client Trust Listing report shows matters with a balance in a trust account, and it will also give you the last activity date. In Tabs3, use the Trust Account List report and select the option to show Last Transaction Date. Review for potential issues where funds are in trust, but should not be.

  • Confirm that the bank journal balances and cost journal balance reconcile to the GL Balance Sheet balances. In PCLaw, review the GL Reconciliation report under the Reports menu. The PCLaw bank reconciliation report will show you the reconciled bank balance according to the bank statement, taking into consideration outstanding checks and receipts. However, this balance may be different than the bank balances on the GL Statement Balance Sheet, which you would give to your tax preparer. Reviewing the GL Reconciliation report will show any bank journal balance that is not in balance with its respective GL account balance on the Balance Sheet.

  • Write off any uncollectable Accounts Receivable balances before 12/31/14 - In PCLaw, review the Accounts Receivable by Client report and use the Change/Write Off Bill function. In Tabs3 you will need to make a journal entry to Credit the Client Advance account and Debit an Expense account generally titled Non-Recoverable Client Advances. Writing off any costs will be an expense to your firm and may reduce your Net Income for the year.

  • Review any Work-in-Progress (WIP) for fees or costs that will not be recovered from the client; these items can be billed and written off before 12/31/14. In PCLaw, the report is Work in Progress and in Tabs3, you can review a Summary WIP report or an Aged WIP Report.

  • Review unbilled credit/retainer balances, particularly for any matters where clean up billing may be necessary for settlements on contingent cases or real estate matters. A lot of times we see where funds are transferred from the Trust Account to the Operating Account, without applying the funds to an invoice. These credits/retainers are not allocated to fees and costs and will not show accurate fee revenue or costs recovered for the year. In PCLaw, you can review a Client Summary report with General Retainer Balances only, and in Tabs3, you can review any of the WIP (Work-in-Process) reports.

  • Review a detailed General Ledger report for all transactions to catch any posting errors. Some examples and frequent issues we see: Equipment and furniture purchases are allocated to an expense account, rather than a fixed asset account. Your accountant can give you guidelines on the dollar amount you can expense; Salaries, payroll taxes, and 401(k)/pension contributions are not properly allocated to expense and liability accounts; Prior year adjusting entries by the accountant were not entered into the system, or the 1/1/14 Balance Sheet beginning balances do not match the prior year-end financial statements; Line of Credit payments are not properly allocated to reduce principal or claim interest expense;

  • Start the 2015 budgeting process.

  • In Tabs3, review the Chart of Accounts and make any unused account INACTIVE to avoid anyone posting new transactions to that account. In PCLaw, you can edit the GL account to uncheck the box "Show Account in Pop Up Help".

Don't hesitate to contact us to help you review your reports and financial statements for any potential issues, or recommendations for cleanup. This email address is being protected from spambots. You need JavaScript enabled to view it. or call us at 877-676-5492.

Let's Get Started Today

with a plan that's right for your practice.

Let Us Teach You

Take advantage of our blog resources, sign up for our law office technology white papers, take a course from Affinity University, Attend all of our Live Events.

Start Now


Hire Us To Do It For You

Hire Affinity Consulting Group to make your law office run more efficiently than ever… We can deliver the hardware, the software, and the training that is perfect to make your law office more efficient.

Start Now


Work With Us

We can give you expert guidance, helping you make smart choices for your law firm. We can help you analyze your current situation and make suggestions that will point you in the right direction.

Start Now


Sign up for our newsletter and

keep your law office efficient.

Join over 4,000 successful law firms who receive our newsletter today.

Email:

Read Our Previous Newsletters