Reconciliation Best
Practices
May 22, 2014
Tricia Cook
Budget & Fiscal Director
Research and Economic Development
Montana State University
What Does “Reconcile”
Mean in Accounting Terms?
• In accounting, reconcile means to compare two sets
of records to make sure they are in agreement
• Most common type of reconciliation that most people
are familiar with is a bank reconciliation where you
compare a bank statement to your own records
• At MSU, most of us will be reconciling our
departmental financial records to Banner
2
What is the Purpose of
Doing Reconciliations?
•
•
•
•
Verify accuracy of transactions
Identify and resolve errors in a timely manner
Confirm accuracy of fund balances
Maintain integrity of University’s accounting records
so the information can be relied on for decision
making
• Ensure compliance with university, state and federal
regulations, circulars and cost accounting standards
3
How Often Should
Reconciliations be Done?
• Normally, departmental funds should be reconciled
monthly
• Special circumstances such as very high volume or
high risk activity may require more frequent
reconciliations
• Must balance effectiveness and efficiency
4
Who Reconciles and What
is Required?
Reconciling should be performed by someone with
sufficient knowledge to:
• Compare transactions appearing on financial reports
to departmental records
• Identify, investigate and resolve any unknown or
unexpected transactions
• Identify and correct coding errors, such as erroneous
account codes
5
Who Reconciles and What
is Required (cont.)?
• Identify expected transactions that have not yet
occurred and resolve problems
• Report irregularities to appropriate authorities
6
How to Segregate Duties?
• “Significant transactions” should not be controlled from
start to finish by the same person
• Significant transactions are large dollar amounts and
transactions that are inherently more risky, such as
cash handling and p-card transactions
• Separating responsibilities for revenue collection and/or
bill payment from reconciling is one way to accomplish
segregation of duties
• If not possible, strong review procedures are necessary
7
What Departmental Financial
Records are Needed?
Source documents supporting initiation and approval of
transactions
• Cash receipts, invoices
• P-Card reports, BPAs, Corrections
• Purchase Orders, Contracted Services Agreements
• Hospitality Forms, Travel Authorizations
• CatBooks/AgBooks, Quicken, QuickBooks, etc.
8
What Banner Finance
Reports are Used?
• Also know as SAIS Finance Reports, MSU
SwitchBoard Reports, etc.
• https://sais.montana.edu/cgi-bin/msu_sb_v3.pl
• Use your Banner User ID and Password to login
9
Finance Reports for
Reconciling General Ops
Run by Index, fiscal year and month
• Operating Ledger Summary – Banner Form FGIBDST
• Operating Ledger Transactions – Banner Form FGITRND
• Payroll Report – Banner Form NHIDIST
Reconcile to the Budget, YTD Expenditures, and
Encumbrances on the Operating Ledger Summary
10
Finance Reports for
Reconciling General Ops
11
Finance Reports for
Reconciling Designated
Funds
Run by Index, fiscal year and month
• Operating Ledger Summary – Banner Form FGIBDST
• Operating Ledger Transactions – Banner Form FGITRND
• Payroll Report – Banner Form NHIDIST
Run by Fund, fiscal year and month
• General Ledger – Banner Form FGITBSR
12
Finance Reports for
Reconciling Designated
Funds (cont.)
Reconcile to the Budget (if applicable), YTD
Expenditures and Encumbrances on the Operating
Ledger Summary
Reconcile to the Cash in Treasury and/or the
Fund Balance on the General Ledger
13
Finance Reports for
Reconciling Designated
Funds (cont.)
Reconcile to the budget (if applicable), YTD
expenditures and encumbrances on the Operating
Ledger Summary
Reconcile to the Cash in Treasury or the Fund Balance
on the General Ledger
14
Finance Reports for
Reconciling Designated
Funds (cont.)
Reconcile to the budget (if applicable), YTD
expenditures and encumbrances on the Operating
Ledger Summary
Reconcile to the Cash Balance or the Fund Balance on
the General Ledger
15
Finance Reports for
Reconciling Grants
Run by Index, fiscal year and month
• Inception to Date – Banner Form FRIGITD
• Operating Ledger Transactions – Banner Form FGITRND
• Payroll Report – Banner Form NHIDIST
Reconcile to the Budget, ITD Expenditures and
Encumbrances on the Inception to Date report
16
17
Other Helpful Finance
Reports
Operating Ledger Transactions (FY)
Operating Ledger Transactions ITD
Operating Ledger Transactions (Month by Month)
Payroll Report (FY)
Payroll by Index or Org
Encumbrance Detail Salary
Billed Scholarships
18
19
20
Who Should Review
Reconciliations and What is
Required?
Performed by someone with sufficient responsibility and
authority to:
• Ensure reconciliations are completed in a timely
manner and errors are satisfactorily resolved
• Review and evaluate fund activity and balances
• Principal investigators should review their grant reports
• Department head is ultimately responsible
21
How are Reconciliations
Documented?
Need to maintain a record of:
• When reconciliation was done and by whom
• Resolution of any errors
• Proof of review by supervisor, principal investigator,
department head, or whatever makes sense in your
organization
22
Who to Contact with
Questions?
• Your HR Payroll Tech regarding salary, benefits and
payroll encumbrances
• UBShelp@montana.edu regarding revenue transactions,
BPAs, P-Card transactions, account codes, etc.
• The originating department regarding auto-bills
• The Budget Office regarding general operating or
designated budgets
• Your OSP fiscal manager regarding budgets and
allowable costs on grants
23
Questions
and
Discussion??
24