Chapter 7: Reconciliation Techniques

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Overview

What is reconciliation?

  • Broadly defined, a reconciliation is comparing different sets of data, identifying & investigating differences, & taking corrective action when necessary.
  • Reconciling monthly financial reports to file copies of supporting documents or to departmental accounting records is an example of reconciling one set of data to another.
  • This control activity helps ensure the accuracy & completeness of transactions charged to FOAPALs.
  • A critical element of the reconciliation process is resolving differences. Differences should be identified, investigated, & explained. Corrective action must be taken as needed.
  • Reconciliations should be documented & approved by management.

Why reconcile?

  • Monthly reconciliation of financial statements to other documents and reports is a critical function that ensures sound financial management.

Reconciliations should be completed monthly in a timely manner, after each accounting period is closed.

Check with your Business Manager regarding your reconciliation responsibilities.


Sample Method

  • Verify that the accounting period you wish to reconcile is now closed. (If the accounting period is not yet closed, transactions may continue to post to that period.)
    • WINGS Express Finance, Open Accounting Period displays periods still open. Check to see that the period you wish to reconcile is not listed. See the Open Accounting Period section in Chapter 2 of the Wiki.
    • Each accounting period is typically closed on the 5th business day in the following calendar month. Please see the Controller’s Office website for a processing schedule.
  • Use the Transaction Detail query to list all of the transactions for the fund-org that you are reconciling, for the appropriate accounting period.
  • Determine what Adopted Budget entries posted during the accounting period for your fund-org and whether they are appropriate.
    • Adopted Budget entries typically post in July, with Rule Code BD01.
  • Determine what Budget Adjustment entries posted during the accounting period for your fund-org and whether they are appropriate.
    • Rule Code BD02/BT2 entries are permanent budget adjustments.
    • Rule Code BD04/BT4 entries are temporary budget adjustments.
    • Budget adjustments are Journal Vouchers that can be viewed online including:
      • ENRLYYxx July carry-forward of budget associated with open encumbrances rolled from the old fiscal year to the new, where YY is the fiscal year.
      • BDRLYYx July carry-forward of budget balances for select funds/orgs from the old fiscal year to the new. (Query _77030 accounts for totals, for most fund-orgs.)
      • EBxxxxx loaded by the Office of Budget Planning & Resource Analysis.
      • VCxxxxx loaded by the Office of Budget Planning & Resource Analysis for vacancy credits related to salaries & benefits for select funds/orgs.
  • Determine what YTD (actual year-to-date) entries posted during the accounting period for your fund-org and whether they are appropriate. There are many different types of actual revenue and expense entries. As you work with your fund-org’s you will become familiar with the set of entries that are typical for your area.
    • See Chapter 3 for common document types & rule codes details which may help you understand various types of transactions for your fund/org.
  • Determine what Reservation entries posted during the accounting period for your fund-org and whether they are appropriate.
    • Examples of Reservation entries are requisitions for Standing Purchase Orders. These feed from WrightBuy as a Finance Requisition, & are then shortly turned into a Purchase Order by the Purchasing Department. When the related Purchase Order is created, the Requisition is removed from the Reservations column.
  • Determine what Encumbrance entries posted during the accounting period for your fund-org and whether they are appropriate.

Annual Budget Carryover

Near the beginning of the fiscal year, many fund-orgs receive a BD04 budget entry from the annual Budget Carryover. The amount of the entry matches the ending Balance Available in that fund-org at the end of the previous fiscal year. This entry posts as a BDRLyyxx document code (where yy is the year).

  • Account Code(s)
    • Most unrestricted fund-orgs which receive Budget Carryover see it post in account code 777030 Budget Pool-Balance Carryover.
    • Other types of funds which receive Budget Carryover may see it post in related budget pool account codes (e.g. 730000 Budget Pool-Supplies for any 73xxxx account code Balance Available amounts).
  • Timing
    • For non-grant funds, the BDRLyyxx entries post in the July accounting period at the end of the July calendar month or beginning of the August calendar month, depending on the annual year-end schedule.
    • For grant-related funds, the entries post at the end of the October calendar month or beginning of the November calendar month, typically in the October accounting period after the university external audit is completed.

Documentation

  • As you review transactions & compare them to your paperwork or electronic documents, keep track of which items have cleared & which are still outstanding or for which you have questions.
    • Some users download Transaction Detail query results to Excel to provide a place for them to check what has been completed, add notes, etc.
    • Some users print Transaction Detail query results & make notations on their hardcopy. (Note that choosing a smaller text size may help fit the columns to 1 page width.)
    • Some users indicate on the source documents which have been reconciled/cleared.
    • Please work with your Business Manager regarding the appropriate approach for the fund-org reconciliations in your area.