---
name: accrued-expense-reconciliation-analyzer
description: "Analyzes accrued expense account balances against prior periods and supporting detail, flags variances above threshold with likely root causes, tests for missing or stale accruals, and drafts proposed adjusting journal entries with US GAAP rationale. Use when reconciling accrued liabilities during month-end or quarter-end close, investigating unexpected accrual balance swings, or preparing accrual workpapers for review."
argument-hint: "[account] [period]"
allowed-tools: ["Read"]
---

# Accrued Expense Reconciliation Analyzer

## 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:
1. **Entry**: Account, debit, and credit amounts (balanced)
2. **Amount basis**: How the figure was derived (invoice, contract rate × days, prior-period run rate)
3. **GAAP rationale**: One to two sentences citing the applicable principle (matching, ASC 450, cut-off)
4. **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

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## How to use this skill

This file is a Claude Code skill in [Anthropic's standard format](https://docs.anthropic.com/en/docs/claude-code/skills) — 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:**

1. Drag this file into a new chat, or copy and paste its contents
2. Send your task or request as your next message — the AI will apply the skill where it fits

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