Representative Month End Closing Process Snapshot for Real Estate firms managing their portfolio in Yardi (Genesis and Voyager), Appfolio and MRI.
Overview
Client Type
Multi-family Residential/ Student Housing
Accounting Software
Yardi (Genesis and Voyager), Appfolio, MRI
Accounting System
Accrual Based Accounting with PO based AP System. AP processed at site level with utilities being processed at OHI end. The same process with some minor changes would be valid if AP is also processed at OHI end. Move-Ins and Move-outs handled from site end.
Key Activities Done
AP Closing, AR Closing, Expense Accruals, Prepaid Amortizations, Bank and Escrow Reconciliations, Inter-Company Entries/Reconciliations, Management Fees Calculations, GL Review including Income and Expense Reclassifications, Variance Comments, Draft Financial Packages and Finalized Financials Packages.
Technology
Accounting Software accessed via web-login or remote desktop connection (for server-based versions), files and data are saved in Dropbox/OneDrive/Google Drive/ Shared Work Folders on client servers.
Brief Description of Key Activities:
AP Closing
All invoices with open Approved POs are processed by AP Cut-off date. Site typically closes any unused unnecessary POs. Any stuck invoices are also cleared out by the cut-off date to avoid accounting accruals. Accounting completes processing of utilities by AP cut-off date. Post AP cut-off date, all new invoices/utilities are posted under next period.
AR Closing
Site completes Move-Ins and Move-Outs by AR closing date. Accounting then closes AR, runs the rent and posts the GPR (Gross Potential Rent) and other income entries via the software. Income related reclassifications for prepaid rent, vacancy, bad debts, credit loss etc. are done. Any open AR tenant balances may be written off unless expected to be collected by site.
Expense Accruals
Utility accruals for any missing/unreceived utilities, accruals of open POs and accruals for real estate taxes, mortgage, and insurance are done. Accrual schedules are maintained to ensure historic unused accruals are either carried over or reversed.
Expense Amortizations
Prepaid Expenses including utilities, security contracts, insurance and taxes are amortized. Prepaid Schedules are updated and tied to balance sheet figures.
Bank and Escrow Reconciliations
Operating, Security Deposit, Petty Cash and other bank accounts are reconciled. Insurance, Tax, Replacement Reserve and Mortgage accounts are reconciled. Reconciliation Schedules are updated, and older reconciling items are cleared.
Trial Balance and GL Review
Accountants review GL transactions and balances to identify any mis-postings, reclass expenses, capitalize large expenditures among others.
Variance Comments
Site level expense variances against budgets are explained by regional managers. Accountants explain variances against utilities, taxes, mortgage, insurance, property management fees, marketing, administrative expense among others.
Draft Financial Packages
Draft financial packages are saved for controller review. Packages typically includes Income statement, Balance Sheet, Trial Balances, General Ledger, Aging Reports, reconciliation reports, prepaid and accrual schedules.
Final Financial Packages
Post iterations and changes suggested by controller, regional managers, final packages are saved for senior management and investors.
