Bank & State Account Reconciliation
1.0 PURPOSE
The purpose of this procedure is to provide guidance on reconciling cash receipts and distri-butions posted to the general ledger accounts. The reconciliation verifies that the amounts reported in the accounting system agree with the amounts deposited to and disbursed from the corresponding bank accounts, identifies all differences and initiates the appropriate correcting entries.
2.0 SCOPE
The scope of this document includes the procedures for:
- Reconciliation of local bank accounts
- Reconciliation of State Appropriations and Cash in State Treasury accounts
3.0 DEFINITIONS
- Bank Tape
- Magnetic bank tape received from the bank each month with canceled checks listed.
- FINS
- Financial Information System
4.0 PROCEDURES
4.1 Reconciliation
4.1.1 Reconciliation of Local Bank and Investment Accounts
Direct deposits and cash receipts are recorded by the Office of Financial Service. Cash distributions are entered in the accounting system by Payroll and Accounts Payable departments. These cash entries are posted to bank accounts, which are unique 6-digit accounts in the general ledger of the financial system. Each bank account has its own perpetual balance and there is a one to one relationship between the book balances and the bank accounts in the banks. In addition to the local bank accounts, UT Dallas has two local investment accounts. The financial transactions for the investment accounts are recorded in the general ledger accounts 016312-1211, 016312-1223 and 016312-1224.
The reconciliation encompasses the following accounts:
- Bank #1 - Bank of America - general ledger account # 000001. This account is used for Accounts Payable activities, student system deposits, wire receipts for contract and grants, reimbursements from State Treasury, and all other miscellaneous daily deposits.
- Bank #2 - Bank of America - general ledger account # 000002. This account is used for payroll purposes.
- Bank #3 - Bank of America - general ledger account # 000003. This account is used for Federal Perkins Loans, formerly National Direct Student Loans (NDSL).
- UTIMCO Short Term Fund (STF) - Investment account - general ledger #016312-1211.
- UTIMCO Intermediate Term Fund (ITF) - Investment account - general ledger #016312-1223.
4.1.2 Reports Used to Reconcile Cash in Banks and Local Investments
General Accounting receives four bank statements, two bank tapes and canceled checks by the 10th of the following month. Bank tapes are sent to Computer Operations with three computer service requests for job numbers: "bkr 0530", "bkr 531" and "bkr 532". After the bank tapes are run by Computer Operations, check list, reconciliation, exceptions, errors and AU32 reports for bank#1 and bank#2 are generated. The following is a complete list of reports used for preparing bank reconciliation:
- VBM001 - FINS check reconciliation report
- Reconciliation report - checks paid during the month
- Exceptions report - differences in amount paid by bank vs. FINS
- Errors report - checks paid and not in FINS
- Check list - list of check status
- AU32 report - payroll check reconciliation
- FBM017 - daily cash receipts listing
- FBM018 - daily cash distribution listing
- FBM019 - FINS cash report
- Student System Reports (ISIS) AR-10, AR-17 and AR-18 - daily details and summary report for student payments
- Bank statement - monthly cash balance and details of cash transactions from bank
4.1.3 Reconciliation Process
Using the above referenced reports, reconciliation accountants reconcile the bank accounts. The objective is to have the reconciliations completed as soon as possible, but no later then 35 days after receipt of bank statements and tapes. The reconciliation process consists of: comparing cash balances in the general ledger cash accounts to the amounts reported on the bank statements, identifying reconciling items and analyzing any differences. Identified corrections that need to be made in the accounting system or bank records are communicated by phone or in writing to the bank(s), the Office of Financial Services, Payroll, Accounts Payable, or Contracts and Grant Accounting. In addition, entries for interest income, bank and credit card charges are prepared by the reconciliation accountant for review, approval and input into the financial system.
4.1.4 Review and Approval Process
Completed bank reconciliation documents are reviewed and approved by the Director of Accounting and Treasury. In addition, quarterly reconciliation review meetings are held with the Associate VP for Business Affairs to resolve old outstanding reconciliation items and identify improvement opportunities related to the reconciliation process. Reconciliation of State Appropriation and Cash in State Treasury Accounts UT Dallas uses bank accounts to record receipts and disbursements of State appropriated funds and the UT Dallas cash in the State Treasury. Different bank account numbers are assigned to each annual appropriation and cash in State Treasury. The bank accounts are reflected in 6-digit general ledger accounts. Please refer to the chart of account for listing of current bank account numbers.
4.2.2 Reports Used to Reconcile State Appropriation and Cash in State Treasury Accounts
The following reports and financial systems screen prints are used to reconcile state appropriations and cash in Treasury accounts:
- DAFR #7480 USAS report of expenditures
- USAS screen #62 - Balances and Totals
- USAS screen #57 - General Ledger monthly totals for fund 0238
- FINS report FBMO43 - General Ledger summary report
- FINS screen 019 - Subsidiary Ledger cost, commitments and budgets data
- FINS screen 018 - General Ledger account summary record
- FINS screen 023 - General Ledger and Subsidiary Ledger transaction details
- FINS FBM019 - Cash activity report by bank
- FINS FBD018 - Daily cash distribution report for month end
- FINS FBD030 - Daily voucher register
- FINS FBD017 - Daily cash receipts
- USASFASU0122 - USAS daily voucher register
- USAS DARF #8190 - Daily document activity report
4.2.3 Reconciliation Process
On an ongoing basis the expenditures in FINS are reconciled to expenditures in USAS through the use of FINS FBD030 and USAS FASUO122 reports. By analyzing the two reports, the reconciliation accountant checks to make sure that the expenditures are being applied to the appropriate appropriation/bank numbers. Any identified discrepancies are corrected by initiating a journal entry for FINS and/or an expenditure transfer voucher for USAS.
Once a month a reconciliation of the remaining balances in the appropriations and the cash in State Treasury in USAS are compared to the corresponding balances in FINS. Any differences are analyzed through the use of the above indicated reports and screens. After segregating the timing differences, amounts needed to be adjusted are identified.
4.2.4 Review and Approval Process
After the reconciliation is reviewed and approved by the USAS Accounting Supervisor, adjusting entries are made by the USAS accountant to correct FINS or USAS records as applicable. The entries are approved by the USAS Accounting Supervisor and input into the financial system in accordance with standard procedures. The time frame for completion of monthly reconciliations and the corresponding adjusting entries is no later than the end of the following month.
5.0 RESPONSIBILITIES
Accounting and Bursar have the responsibility for the timely and accurate recording of cash receipts and direct deposits.
Accounting, Payroll and Procurement departments have the responsibility for providing information regarding unusual cash booking and resolving any differences identified by General Accounting.
Accounting has the responsibility for communicating reconciliation findings that require action to the bank, Bursar, Payroll , Procurement and other departments in a timely manner. Any significant findings resulting from bank reconciliation must be brought immediately to the supervisor's attention.
Accounting has the responsibility for timely resolution of questions and discrepancies identified by other departments.
Contract and Grant Accounting has the responsibility for providing information to Financial Services on wire transfer requests for contract and grants.
The Director of Accounting is responsible for the timely review and approval of all reconciliations.
The Associate V. P. for Finance & Controller has the responsibility for making the decision to write off insignificant reconciliation items.
The Director of Accounting has the responsibility for scheduling quarterly reconciliation status meetings.
All Administrative departments in the university have the responsibility to notify Accounting of any wired departmental cash inflow to the banks.
Last Updated: July 8, 2011
