Reconciliation Best Practices
May 22, 2014
Tricia CookBudget & Fiscal Director
Research and Economic DevelopmentMontana State University
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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
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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
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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
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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
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Who Reconciles and What is Required (cont.)?
• Identify expected transactions that have not yet occurred and resolve problems
• Report irregularities to appropriate authorities
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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
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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.
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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
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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
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Finance Reports for Reconciling General Ops
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Finance Reports for Reconciling Designated
FundsRun 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
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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
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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
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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
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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
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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
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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
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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
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Who to Contact with Questions?
• Your HR Payroll Tech regarding salary, benefits and payroll encumbrances
• [email protected] 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
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Questionsand
Discussion??