Account Reconciliation
Training
Course Objectives
This course consists of two primary
objectives:
1. To inform reconcilers of the resources
available to perform a proper reconciliation.
2. To provide guidance on completing the
account reconciliation.
What is an account
reconciliation?
• Process of comparing information
• Analyzing differences
• Making corrections
• Consistent data
Why reconcile your department
account?
• Ensure the account is correctly charged for all expense
and encumbrances
• Ensure that all revenue is recorded (as applicable)
• Ensure the accuracy and completeness of transactions
• Ensure errors or discrepancies noted during the
reconciliation process are corrected
Accuracy and Completeness includes
a review of the entries to insure that
they are:
• Appropriately classified to the account,
• Authorized in accordance with University
policies, State and Federal laws and
regulations, and specific sponsor or donor
requirements or restrictions,
Accuracy and Completeness includes
a review of the entries to insure that
they are:
• Within the guidelines of the stated purpose
of the account and
• Have matching dollar values for each
transaction between SAP and your
department’s records.
Who should prepare account
reconciliations?
• UPPS No. 03.04.02.
The account manager or designee must regularly
reconcile budget and financial transactions in
university financial systems with the transactions’
corresponding source documents.
• If possible, reconciliations should be prepared
by the department’s support staff, but reviewed
and approved by the account manager for
proper segregation of duties.
When should account
reconciliations be prepared?
Departmental account reconciliations
should be prepared monthly.
All postings in SAP will be complete by the 10th
of the following month, with the exception of
Restricted funds.
Where should account reconciliations
be kept?
• Evidence of reconciliation, and its
completion, along with supporting
documentation, should be maintained
in department offices.
How long should account
reconciliations and support
documentation be retained by the
department?
Per University’s Retention Schedule for
Financial Documents:
Fiscal Year End + 3
Types of Transactions
The department should maintain support
documentation for each of these types of
transactions for reconciling purposes.
1.Budget changes and carryforwards
2.Encumbrance transactions
3.Expenditure transactions
4.Revenue transactions
What is Support Documentation?
1.Budget changes and carryforwards – budget
change forms, or documentation of budget at
beginning of fiscal year
2.Encumbrances – small purchase orders,
departmental purchase requisitions, purchase
orders, travel applications, etc.
3.Expenditures – invoices, report of phone
charges, packing slips, travel vouchers,
receipts, etc.
4.Revenue – deposit receipts, etc.
What reports should I use in SAP to
reconcile our department’s account(s)
The suggested beginning point for any reconciliation should be the Budget
to Actual Report in SAP (Transaction Code: ZBUDACT)
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The Budget to Actual Report provides a
summary of the account:
It summarizes the budget balance,
how much has been spent from the account,
how much revenue has been taken in,
how much has been encumbered
and the available balance.
Refer to the Budget Office’s training document
http://www.fss.txstate.edu/budget/training/how-to-andreference
How To Instructions for Budget to Actual Report:
Where can I obtain Line Item Detail
without drilling down into each
Commitment Item on the Budget to
Actual Report?
Line Item Detail can be obtained from :
All Postings Report
Transaction Code: ZFMRP_RFFMEP1AX
Refer to the Budget Office’s training document
http://www.fss.txstate.edu/budget/training/how-to-andreference
Let’s Reconcile!
Step 1 – Gather Source Documents
and Prior Month’s Reconciliation
(i.e. transactions you initiated in the
past month)
Make it a habit to track transactions in an
Excel Spreadsheet because it:
• Helps eliminate accidental omission of account
activity
• Provides an up to the minute budget balance
• Makes the reconciliation process easier to
complete
Step 2 – Check Beginning Balances
The reconciler must verify that the beginning
revenue/expense totals match to the prior
month ending amounts. Run the Budget to
Actual report in SAP to confirm balances.
Step 3 – Current Period Activity
In SAP, run All Postings for applicable
period.
(Transaction Code: ZFMRP_RFFMEP1AX)
Subtotal results by Reference Document
number to obtain totals by invoice, journal
entry, etc.
SAP-ALL POSTINGS
ZFMRP_RFFMEP1AX
Results have been filtered to include Invoices and Profit Transfer Postings
only. Results then subtotaled by Period/Year and Reference Document
Number, providing totals for each transaction, each month and cumulatively.
Step 4 - Compare SAP current period
records to department’s records
1. For visual ease, check off items in the
SAP report and matching department
record.
2. Add the month cleared, document
number and dollar amount paid in the
columns to the right of your running
balance on the Department’s Excel
Record. The unchecked items on both
set of records represent your reconciling
items.
Step 5 – Investigate each Reconciling
Item
Reconciling items may or may not
require adjustments in accounting
records.
Reconciling Items
Common Reconciling Items
• Timing Differences
• $ Amounts are different
• Incorrectly Coded Items
• Missing Items
Timing Differences
• Identify prior month timing differences
which posted in the current period.
These are no longer reconciling.
• Identify current period items expected to
clear in the following month due to
timing differences. These ARE
reconciling items.
Timing Difference Example
eIDT has been entered into SAP, but not posted
by month end.
The expense would be reflected in your
departments records, but not posted in SAP. It
is expected to move through the approval
process and post in the following month.
This IS a reconciling item.
$ (Dollar) Amounts are different
• Identify invoices/charges with
differing dollar amounts. Is the
invoice final? Do you expect
additional charges to be paid for
this transaction? These ARE
reconciling items.
Difference in $ Amount Example
•
eIDT posted to your account charging for 3.5 hours of police work @
$40 per hour, but amount posted in SAP is $160.00.
Contact the department that processed the eIDT to determine why:
Is the amount a result of a calculation error? If yes, then the
difference of $20 ($160.00 - $140.00) would be a reconciling item in SAP,
requiring an eIDT correction.
Is the amount a result of the officer working 4 hours instead of 3.5? If
yes, then the difference of $20 would be a correction that needs to be
made to your department’s records.
Incorrectly Coded Items
Possible coding errors:
Fund
Fund Center
Internal Order
General Ledger Code
Incorrectly Coded Item Example
Expense amount of $125.00 matches in SAP and your
department’s records for 1000 pink answer sheets.
The General Ledger code in SAP is 721000
(Professional Fees and Services), but your records
indicate the GL is 730000 (Consumable Supplies).
The SAP GL is incorrect. This would be a reconciling
item for SAP.
Incorrect GL Code Doc# 123
-$125.00
Correction of GL Code Doc# 123
$ 125.00
An eIDT correction must be initiated.
Erroneously Posted Items
Items posting in SAP that are not your expense (revenue).
Contact the department that initiated this transaction and
obtain a copy of the source document.
Is the item charged to the wrong fund or fund center?
If yes, this would be a reconciling item in SAP and a
correction in SAP will be required.
Erroneously Posted Item Example
An invoice is paid to an Outside Vendor, but your
department did not initiate the transaction.
Contact Accounts Payable (AP) to obtain a copy
of the invoice.
Review transaction to determine initiator.
Contact the initiator’s department so that they
can process an eIDT AP invoice correction in
SAP to fix the fund / fund center.
Missing Items
• Missing items can occur in either SAP or your
department’s records.
• Identify which system of record is missing the item.
• Contact the appropriate office.
• Evaluate the supporting documents to determine if the
item is coded to the correct funding source.
• Initiate corrections to the correct system of record.
Missing support documentation
Example
An eIDT was paid to Copy Services, but you do not have a
copy of the transaction.
Obtain a copy of the transaction from the Copy Services.
If the charge is correct, the expense needs to be added to
your department’s records.
If the charge is incorrect, the expense needs to be adjusted
in SAP through an eIDT. This would be a reconciling item
in SAP.
Proposed Corrections
The reconciler will occasionally need to initiate
corrections to SAP. The eIDT process can be
used to correct Interdepartmental Transfers,
Cash Receipts and Accounts Payable
transactions.
The reconciler should make certain that all
proposed corrections from previous months
have posted. Once reflected in both systems,
they are no longer considered reconciling items.
Review for Proper Approval
During the course of reconciling, the reconciler
must make certain that each transaction has
proper approval given by the department’s account
manager or delegated authority.
Note: The new eIDT system does not require the
account manager receiving revenue to approve the
transaction. An assumption has been made that
additional funds are never refused.
Step 6 – Reconciliation Report
Upon completion of the reconciliation, a report
should be created which provides a snapshot of
the reconciled balances between SAP and the
department records (aka systems of record).
Each system of record will include the prior
month’s ending balance, plus/minus reconciling
items and an adjusted ending balance. The
adjusted balances should equal.
The reconciliation report will provide an accurate
depiction of your true account balance as of a
specific point in time.
Step 6 – Reconciliation Report
The reconciler should provide the completed
reconciliation report to the department’s
account manager for review and approval.
The account manager should sign and date
the report to verify review.
The report should then be filed within the
department along with supporting documents
used in the reconciliation process.
Reconciling Items from the
Department’s Excel Record are added
to the Reconciliation Summary
RECONCILIATION TEMPLATE
(Can be found on Texas State Website under GAO-FR&A Forms)
SAMPLE RECONCILIATION
A sample reconciliation packet
will be handed out in class as a
reference. This sample packet
can also be accessed on the
GAO FR&A Texas State
Website @
http://www.txstate.edu/gao/Forms.html
HELPFUL SAP T-CODES TO
RECONCILE ACCOUNT
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Budget to Actual Report - ZBUDACT
Salary/Fringe Report- ZFISALFRINGE
Purchase Orders by Account Assignment – ZME2K
Operating Expense Report – ZFI_OPER_EXP_RPT
Open Encumbrance Report – ZOPEN_ENCUMBRANCE
Typical Document Types
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ZB – Budget Changes
RB – Cash Receipt Transactions
J* - Journal Vouchers
PA – Payroll Posting
RE / NP – Accounts Payable
PK – Pcard Transactions
• * Represents a wildcard
SAP-ALL POSTINGS
ZFMRP_RFFMEP1AX
Results have been filtered to include Invoices and Profit Transfer Postings
only. Results then subtotaled by Period/Year and Reference Document
Number, providing totals for each transaction, each month and cumulatively.
SAP-ALL POSTINGS
ZFMRP_RFFMEP1AX
Results have been filtered to include Invoices and Profit Transfer Postings
only. Results then subtotaled by Period/Year and Reference Document
Number, providing totals for each transaction, each month and cumulatively.
SAP-ALL POSTINGS
ZFMRP_RFFMEP1AX
Results have been filtered to include Invoices and Profit Transfer Postings
only. Results then subtotaled by Period/Year and Reference Document
Number, providing totals for each transaction, each month and cumulatively.
SAP-ALL POSTINGS
ZFMRP_RFFMEP1AX
Results have been filtered to include Invoices and Profit Transfer Postings
only. Results then subtotaled by Period/Year and Reference Document
Number, providing totals for each transaction, each month and cumulatively.
SAP-ALL POSTINGS
ZFMRP_RFFMEP1AX
Results have been filtered to include Invoices and Profit Transfer Postings
only. Results then subtotaled by Period/Year and Reference Document
Number, providing totals for each transaction, each month and cumulatively.
Congratulations!!
You have successfully completed
Account Reconciliation Training through
Texas State University.