Cost Center Reconciliation
Cost center reconciliation and approval demonstrates good stewardship and accountability of financial resources. It is a comparison of the department’s monthly financial transactions in PeopleSoft to supporting documentation, which is retained by the department. Reconciliation is essential for an effective internal control environment to ensure:
- The accuracy and validity of the entries and balances.
- The transactions are accurately recorded.
- Unauthorized charges/changes did not occur.
- Resolution of discrepancies occurs in a timely fashion.
UT Dallas Business Practice
Reconciliation, review and approval of cost center financial records should be performed on a monthly basis by knowledgeable personnel. The reconciliation, review and approval should occur within 30 days of month-end close. Departments are notified by email of each month-end close.
Cost center owners should assign the reconciliation process to someone in their department who is knowledgeable of the financial activity to ensure that an effective reconciliation occurs. In addition, cost center owners should either perform the monthly approval of cost center reconciliations or delegate that process to someone other than the reconciler and to someone who has knowledge of the financial activity. An effective process will ensure inaccuracies or incomplete financial information identified during the reconciliation or verification process are investigated and corrected in a timely manner. Cost center owners should also ensure that a good segregation of duties and other internal controls exist in their departments.
To access the account reconciliation applications, log in to Galaxy. Within the left menu column labeled “Toolbox,” select “Gemini Financials” and navigate to the account reconciliation application.
Although departments may review their ongoing cost center activity throughout the month, a formal reconciliation of the accounting records is required monthly in the University’s accounting system. A cost center reconciliation consists of:
- Comparing departmental supporting documentation with the current month’s recorded transactions (encumbrance, actual and budget transactions) listed in the PeopleSoft Account Reconciliation Application.
- Ensuring all transactions have supporting documentation and are accurate, authorized and appropriate to the mission of the department and the University.
- Noting any errors or questionable transactions in the system and initiating corrective action.
- Completing the system reconciliation by clicking the reconciliation check boxes.
Review and Approval
The review and approval of cost centers is a broader and less detailed process than the steps involved in the reconciliation. Specifically, the approver should consider the following questions:
- Do the transactions appear appropriate for departmental/University business?
- Are there any suspicious-looking transactions?
- Does it appear that the accounts have been reconciled (i.e. the reconciler has noted transactions)?
- Has the reconciler explained any unrecognized transactions?
When the approver completes the review process and believes all transactions are logged, accurate, appropriate and authorized, then he/she will check the “approved” check box indicating that he or she has reviewed and approved the reconciliation and notes regarding the reconciling items for the cost center’s monthly activity.
Supporting documentation for transactions recorded to the cost center and used for reconciliation purposes should be retained. Supporting documentation should be kept in accordance with record retention guidelines. See the University’s records retention schedule for more information.
The process of examining financial information for similarities or differences.
The process of comparing information that exists in two systems or locations, analyzing differences and making corrections so that the information is accurate, complete and consistent in both systems or locations. For departmental purposes, the process includes comparing the supporting documentation retained by the department to the information recorded in the Account Reconciliation Application.
The process of examining financial information for accuracy and reasonableness. If determined to appear inaccurate or unreasonable, further investigation is warranted.
The process of examining information contained in an account, report or system to ensure that it is accurate and complete.
The practices performed by departments to provide management with reasonable assurance that assets are safeguarded and transactions are authorized, valid, complete and accurate.
Segregation of duties:
The concept of having more than one person required to complete a task. To create a good segregation of duties, the individual steps of a task that should be separated between multiple employees include authorization, custody, record keeping and reconciliation.