Purpose
Analyze accrued expense balances against prior periods and supporting detail, isolate the specific drivers of every material variance, and produce review-ready adjusting entries with US GAAP rationale — turning a manual, error-prone month-end reconciliation into a structured, defensible workpaper.
When to Use
Invoke this skill when the user asks to:
- Reconcile accrued liabilities or accrued expense accounts at month-end or quarter-end
- Explain why an accrual balance changed materially versus the prior period
- Identify missing, duplicated, or stale accruals before closing the books
- Draft or review adjusting journal entries for accruals and reversals
- Prepare an accrual reconciliation workpaper for controller or auditor review
- Assess whether recorded accruals are supported and GAAP-compliant
Inputs Required
Before starting, collect:
- Account(s) under review: Account name and number (e.g., 21500 – Accrued Expenses), and sub-ledger detail if available
- Current period balance: Ending GL balance for the close period
- Prior period balance(s): Prior month ending balance, and same period last quarter/year if trend analysis is needed
- Supporting detail: Accrual schedule, invoice/PO listing, contracts, or vendor estimates backing the balance
- Reversal method: Whether accruals auto-reverse next period or are manually adjusted
- Materiality threshold: Dollar or percentage variance that requires investigation (e.g., $5,000 or 10%)
- Known events: Any new contracts, vendor changes, one-time charges, or timing shifts in the period
If the materiality threshold is not provided, default to the greater of $5,000 or 10% of the prior balance and note the assumption. If reversal method is unknown, assume standard reverse-and-re-accrue.
Instructions
Step 1: Reconcile Balance to Supporting Detail
Confirm the recorded GL balance ties to the underlying schedule before analyzing anything.
- Sum the supporting detail (accrual schedule line items, open POs, unbilled receipts) and compare to the GL ending balance
- Report the tie-out result: In balance / Out of balance by $X
- If out of balance, list the reconciling difference as the first item requiring resolution — do not proceed with variance analysis as if the balance is clean
Step 2: Period-over-Period Variance Analysis
Quantify the change and locate its source.
- Calculate the dollar and percentage change from prior period:
Current − Prior - Decompose the net change into its components where detail allows: new accruals booked, prior accruals reversed, adjustments, and reclassifications
- Flag every line-level variance exceeding the materiality threshold
- For each flagged variance, assign a likely root cause from: timing shift, rate/volume change, new/expired contract, missed reversal, duplicate entry, reclassification, or estimate revision
Step 3: Missing and Stale Accrual Testing
Test for what should be accrued but isn't, and what shouldn't still be there.
- Missing accruals: Identify recurring accruals present in prior periods but absent this period (e.g., utilities, payroll, professional fees, bonus) — flag each as a potential understatement
- Stale accruals: Flag any accrual carried more than one period without a supporting invoice or event — assess whether it should be relieved
- Cut-off exposure: Note expense categories with known invoice lag where an estimate may be required to record the expense in the correct period (matching principle)
- Duplicate risk: Flag any accrual that may overlap with an already-posted invoice or AP entry
Step 4: GAAP Compliance Assessment
Evaluate each material accrual against recognition criteria.
- Confirm the expense is probable and reasonably estimable (ASC 450 for loss contingencies where applicable) and relates to the current period per the matching principle
- Flag accruals that appear to be cookie-jar reserves (over-accrued to smooth results) or unsupported estimates lacking a documented basis
- Note any accrual that should be classified as a provision, contingency, or reclassed to a different liability account
Step 5: Draft Proposed Adjusting Entries
For each issue requiring correction, draft a complete journal entry. For every proposed entry, provide:
- Entry: Account, debit, and credit amounts (balanced)
- Amount basis: How the figure was derived (invoice, contract rate × days, prior-period run rate)
- GAAP rationale: One to two sentences citing the applicable principle (matching, ASC 450, cut-off)
- Reversal treatment: Whether the entry auto-reverses next period
Step 6: Summarize and Prioritize
Produce a findings summary ranked by dollar impact, distinguishing entries required before close from items to monitor next period.
Output Format
- Structure: Reconciliation workpaper — tie-out result, variance table, findings list, proposed entries, summary
- Length: 700–1,100 words
- Format: Variances and proposed entries in tables; findings and rationale in structured bullets
- Sections: Balance Tie-Out → Period-over-Period Variance → Missing/Stale/Duplicate Findings → GAAP Compliance Notes → Proposed Adjusting Entries → Prioritized Summary
- Tone: Precise, review-ready, and conservative — the voice of a staff accountant preparing a workpaper for controller sign-off; every conclusion tied to a number or a principle
Quality Checklist
Before delivering output, verify:
- [ ] The recorded balance is explicitly tied to supporting detail with an in-balance / out-of-balance result stated
- [ ] Every variance above the stated materiality threshold has an assigned likely root cause
- [ ] Missing, stale, and duplicate accrual tests are each performed and reported (not skipped)
- [ ] Each proposed journal entry is balanced (total debits = total credits) and shows an amount basis
- [ ] Each material accrual references a specific GAAP principle or standard, not just "per GAAP"
- [ ] Findings are ranked by dollar impact and split into "before close" vs. "monitor" items
Notes
- The single most common accrual error is a missed reversal — always reconcile the current balance against what the prior period's auto-reversal should have removed
- Distinguish a genuine estimate revision from an error; revisions are prospective and disclosed, errors require correction
- When supporting detail is incomplete, state the balance that cannot be substantiated rather than assuming it is valid — an unsupported accrual is itself a finding
- Cut-off is where most audit adjustments originate; scrutinize the last and first several days of the period for invoices booked to the wrong month
How to use this skill
This file is a Claude Code skill in Anthropic's standard format — markdown with YAML frontmatter at the top.
Installing in Claude Code:
~/.claude/skills/<folder-name>/SKILL.md— auto-loads in every session anywhere on your machine (recommended for skills you'll use across multiple projects)<your-project>/.claude/skills/<folder-name>/SKILL.md— auto-loads only when working in that project (recommended for project-specific skills)
Restart Claude Code or open a new session to register.
Using in Claude.ai, ChatGPT, Gemini, or other AI tools:
- Drag this file into a new chat, or copy and paste its contents
- Send your task or request as your next message — the AI will apply the skill where it fits
For Claude Code skill details: https://docs.anthropic.com/en/docs/claude-code/skills