Why You Should Automate Your True-up Journal Entries

1 min read
October 11, 2023
CoStar Real Estate Manager Blog

Why You Should Automate Your True-up Journal Entries

What if you could post adjustments with audit details to the GL?

Accounting teams are often the last to know about changes to real estate and equipment portfolios. Lease data errors or omissions discovered after month-end close require correction. Especially now that all leases are under ASC 842. This is often a manual process performed in spreadsheets when software lacks the functionality to fix these issues automatically.

To fix the problem, ASC 842 requires that accountants must show three things:

  • The amount that should have originally been booked.
  • The amount that was booked.
  • The difference between the two amounts.

This tedious process is time-consuming and introduces risk with accounting records maintained outside the system. And private companies want risk as far away from their balance sheets as possible.

The better approach is to have lease accounting software that automatically calculates the true-ups based on the dates of adjustments. Then, it posts the impact to the general ledger in the current period. Here's the kicker: when you post the effect, it doesn't affect a closed accounting period. This allows for a better audit trail of the transactions.

Better automation for adjustments saves time and reduces risks at audit time.

This is one of the five essential steps for being audit-ready. Read more in the new eBook Five Ways Lease Accountants Can Be Audit-Ready Anytime.