What is the best way to write-off outstanding checks from a prior year in the bank reconcilation module?

Make your adjusting entry in the transaction screen, [re]-import the transactions, and then check off both the entry and checks on the client books.

Here is where judgement comes in. If you leave it as-is, then the additions & subtractions will not match the bank statement. The only way to get around this is to delete the entries from the bank side of the reconciliation so that the bank side will reflect what actually went through the bank while updating your book balance and clearing the outstanding entries. Unfortunately, this will create negative variances in the add/sub columns on your Proof of Cash report. I just use this second method and note on the Proof before printing that the offsetting negative variances are caused by writting-off stale checks outstanding. Correcting checks when previously overstated is the same way, only correcting checks to a higher amount can pass without throwing variances. You will just have to choose whether the Proof matching the bank statement or passing without variances (even if clearly explained) is more important.