Year-End Close Checklist for CAM Billing

The Year-End Close Determines Everything Downstream

Every reconciliation error traced back to its root lands in one of two places: the lease abstract or the year-end GL. You can have perfect lease abstracts and still produce a wrong reconciliation if the underlying expense data is inaccurate.

A $50,000 HVAC compressor coded to GL 6210 (Repairs & Maintenance) instead of GL 1520 (Building Improvements) adds $50,000 to the CAM pool. On a 200,000 SF building, that is $0.25/SF pushed to every tenant. A 10,000 SF tenant gets billed an extra $2,500 they should never have owed. When the tenant's auditor catches it — and they will — you refund the money, pay for the audit (if overcharges exceed the lease threshold), and lose credibility for the next three reconciliation cycles.

This checklist covers December through January, the two months where year-end close either sets up a clean reconciliation or guarantees problems that surface in March.

December: Pre-Close Preparation

Week 1–2: Accrual Review

Pull every accrual entry posted during the fiscal year. For each one, answer two questions: is it still needed, and is the amount still accurate?

Common accruals that need December adjustment:

Action item: Create a spreadsheet tracking every accrual by GL account, original amount, current amount, and required adjustment. This becomes your close documentation.

Week 2–3: CapEx vs. OpEx Classification

Run a report of all entries in GL 6200–6299 (Repairs & Maintenance) above $5,000. For each one, ask: does this extend the useful life of the asset, or does it maintain existing functionality?

The IRS tangible property regulations (IRC Sec. 263(a)) provide the framework, but for CAM billing purposes the lease definition controls. Most leases exclude capital expenditures entirely or allow recovery only through amortization over the asset's useful life.

Items that get miscoded every year:

• Roof patches ($3,000–$8,000): Repair, stays in CAM. Roof replacement ($80,000+): Capital, must be excluded or amortized.
• HVAC compressor swap: Capital if it replaces a major component. Repair if it is a refrigerant recharge or belt replacement.
• Parking lot seal-coating ($15,000–$40,000): Maintenance, stays in CAM. Parking lot repaving: Capital.
• Elevator cab renovation: Capital. Elevator annual maintenance contract: Operating expense.

If you are unsure, check the invoice description and the asset's remaining useful life. When the cost exceeds 20% of the asset's replacement value, it is almost certainly capital.

Week 3–4: Vendor Invoice Sweep

Contact every vendor with a recurring contract and confirm whether all invoices through December 31 have been submitted. The vendors who cause the most year-end delays:

1. Landscaping companies — December invoices for fall cleanup and winterization often arrive in late January.
2. Security firms — Holiday staffing surcharges get billed 30–45 days after the fact.
3. Utility companies — Final December meter reads may not generate bills until mid-January.
4. Property tax authorities — Supplemental tax bills arrive on their own schedule.

For any vendor invoice you expect but have not received, book an accrual based on the prior month's amount or the contract rate. Mark these accruals with a "pending invoice" flag so they get reversed when the actual invoice posts.

January: Close the Books

Week 1: Final Invoice Entry

Deadline: January 15. Every invoice dated December 31 or earlier must be entered by this date. This includes:

• All vendor invoices received during the first two weeks of January with a December service date
• Any December utility bills that arrived in early January
• Year-end property management fee calculations
• Insurance premium adjustments from mid-year policy changes

Run an AP aging report sorted by invoice date. Any invoice with a December date still in "pending" status after January 15 needs immediate attention.

Week 2: Accrual True-Up

For every accrual booked in December, compare the accrued amount to the actual invoice (if received) or your best estimate (if still pending).

The math is simple but the consequences of skipping it are not:

• December property tax accrual: $42,000. Actual bill: $43,200. Post a $1,200 adjusting entry.
• December insurance accrual: $18,500. Actual premium invoice: $18,500. No adjustment needed. Reverse the accrual and book the invoice.
• December snow removal accrual: $6,000. Actual invoices received: $4,800. Reverse $1,200 of the accrual.

The most damaging error is forgetting to reverse placeholder accruals from earlier in the year. If you accrued $35,000 for property tax in Q2 as a placeholder, then booked the actual $43,200 tax bill in Q4, you now have $78,200 of property tax in the GL instead of $43,200. That $35,000 residual accrual goes straight into the CAM pool unless someone catches it.

Week 3: GL Account Reconciliation

For each property, run a year-over-year comparison by GL account. Flag anything that changed more than 10% and document the reason.

Document every variance above the trigger threshold. This documentation serves two purposes: it validates your GL for reconciliation, and it becomes your first line of defense if a tenant auditor questions the numbers.

Week 4: Cross-Property Allocation Review

If any expenses are allocated across multiple properties (shared parking structures, central plant utilities, corporate management overhead), verify the allocation methodology:

• Is the allocation based on square footage, actual usage, or some other metric?
• Did any property in the allocation pool change occupancy, square footage, or ownership during the year?
• Are the allocation percentages documented and defensible?

Shared-cost allocations are the second most disputed item in tenant audits (after CapEx classification). Every allocation needs a written methodology that you can hand to an auditor without additional explanation.

The Five Year-End Mistakes That Corrupt Reconciliation

1. Closing Too Early

Closing the GL on January 5 to "get ahead" means you are accruing half your December expenses. Accruals introduce estimation error. A January 31 close with actual invoices produces better data than a January 5 close with ten accruals.

2. Not Reversing Placeholder Accruals

Mid-year accruals for property tax, insurance renewals, and seasonal expenses (snow removal, holiday landscaping) must be reversed when actuals post. The accrual journal entry and the reversal must reference each other. In Yardi, use the Recurring JE module with automatic reversal. In MRI, set the accrual type to "auto-reverse" in the journal entry header.

3. Booking CapEx to Operating Expense GL Codes

This is the error that generates the largest tenant audit refunds. A single $75,000 HVAC replacement coded to R&M can produce $3,000–$5,000 in tenant overcharges per year depending on building size. Over a three-year audit lookback, that is $9,000–$15,000 per tenant with audit rights.

4. Ignoring Mid-Year Reclassifications

If your property manager reclassified $20,000 from Utilities to R&M in July to "clean up the GL," that reclassification needs to be validated before year-end. Reclassifications change which expense pool a cost belongs to, which changes which tenants pay for it (if your leases define separate CAM pools for different expense categories).

5. Using Last Year's Rent Roll

The denominator for pro-rata share calculations must reflect actual occupancy for each month of the billing year, not a snapshot from any single date. A tenant who moved out in August should only appear in the denominator for January through July. Using the December 31 rent roll for the full year understates the denominator and over-bills remaining tenants for the months the departed tenant occupied the space.

Year-End Close Quality Check

Before marking the GL as "closed for reconciliation," run these five validations:

1. Trial balance check: Debits equal credits for every property. Any imbalance means a posting error.
2. Accrual reversal check: Every accrual posted during the year has a corresponding reversal or actual invoice replacing it.
3. CapEx audit: Every R&M entry above $5,000 has been reviewed for proper classification.
4. Year-over-year variance: Every GL account with >10% change has a documented explanation.
5. Allocation verification: Every cross-property allocation uses current-year square footage and occupancy data.

CapVeri automates steps 2 through 5 by comparing your GL export against prior-year data and flagging variances, unmatched accruals, and potential CapEx miscoding before reconciliation calculations begin.

For the month-by-month reconciliation timeline that picks up after year-end close, see /resources/cam-reconciliation-timeline-checklist. For guidance on CapEx classification rules and how they affect CAM pools, see /resources/capex-detection-cam.