Updated: Jun 3
Anytime you have a sub-ledger, you'll want to reconcile it to the trial balance. What the hell do I mean? Great question! Your accounts receivable (AR) aging report is a sub-ledger, a detail of what should make up the balance on the trial balance.
Experiment time. Go to your accounting software and run an AR aging schedule, the report that shows the balances due to you by customer on a specific day, say December 31st. Now, go to your trial balance as of December 31st and look up the balance under accounts receivable. Do they match? They should! You're likely to have an accounts receivable and accounts receivable retainage account so you'll want to reconcile both.
What if they don't reconcile? It's all over, you'll never work in this town again. Not really. You've identified an issue and you're going to get to the bottom of it! There could be many reasons for this but it's likely that you've recorded a journal entry to accounts receivable, outside of the sub-ledger. Pull up the GL detail, detail of your trial balance, and scan through it to find the difference.
Now on to the contract schedules! Whether you use Quickbooks, Foundation, Vista (Viewpoint), etc., you'll need to make sure your contract schedules reconcile to the trial balance. It can be a little trickier than the AR example discussed above but it's really not that bad! It just depends on what system you're running.
1) Quickbooks: This is two pronged. You have what is known as the "Profit and Loss by Job Detail" and a "Profit and Loss Summary" (I may not have the exact names for these and the following examples because I'm working from memory). These are your contract schedules. The first breaks out the revenue and costs by project by account and amount, while the latter shows the total revenue and cost by project. Technically, both of these reports should be saying the same thing but it's not often that they do. Now, your total contract revenue per your financial statements is likely to include more than one trial balance account, typically Sales Revenue and Over/Underbillings. Your sales revenue account on it's own should represent the total amount billed during the year, including retainage for all of your projects. So, does the "Profit and Loss Summary" report through December 31st reconcile to your sales revenue account on your trial balance as of December 31st? If it doesn't you may have recorded revenue outside of a job/project, which depending on the amount, may not be a big deal. The same strategy applies to job costs! Since project costs and revenues are on a cumulative basis, inception to date, you'll want to factor in prior year billings and costs when calculating WIP.
2) Foundation and Vista: These programs are similar enough in their reports to combine them here. Run your "Active" or "Open" job schedule and "Inactive" or "Closed" job reports and reconcile the billed to date per these reports to the the contract sales revenue accounts per the trial balance as of December 31st. The costs to date per the job schedules should reconcile to the job costs as of that date! The good news here is that since you've got software specifically designed for the construction industry, you can reconcile the over/underbillings per the "Open" or "Active" job reports to the trial balance as well!
If you have any questions, don't hesitate to reach out! firstname.lastname@example.org