Account Reconciliation Training - PowerPoint Presentation

Slide1

Account Reconciliation TrainingSlide2

Course

Objectives

This course consists of two primary objectives:

To

inform reconcilers of

the

resources

available to

perform a proper

reconciliation.

2. To

provide

guidance on completing the

account reconciliation.Slide3

What is an account reconciliation?

Process

of

comparing

information

A

nalyzing

differences

Making

corrections

Consistent

dataSlide4

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 correctedSlide5

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,Slide6

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.Slide7

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. Slide8

When should account reconciliations be prepared?

Departmental

account reconciliations should be prepared

monthly

.

All postings in SAP will be complete by the 10

th

of the following month, with the exception of Restricted funds. Slide9

Where

should account reconciliations be kept?

Evidence of reconciliation, and its completion, along with supporting documentation, should be

maintained in

department offices.Slide10

How long should account reconciliations and support documentation be retained by the department?

Per University’s Retention Schedule for Financial Documents:

Fiscal Year End + 3Slide11

Types of Transactions

Budget changes and carryforwards

Encumbrance transactions

Expenditure transactions

Revenue transactions

The department should maintain support documentation for each of these types of

transactions for reconciling purposes.Slide12

What is Support Documentation?

Budget changes and carryforwards – budget change forms, or documentation of budget at beginning of fiscal year

Encumbrances – small purchase orders, departmental purchase requisitions, purchase orders, travel applications, etc.

Expenditures

– invoices, report of phone charges, packing slips, travel vouchers, receipts, etc.

Revenue

– deposit receipts, etc.Slide13

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)

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. Slide14

Refer to the Budget Office’s training document

http

://www.fss.txstate.edu/budget/training/how-to-and-reference

How To Instructions for Budget to Actual Report:Slide15

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_RFFMEP1AXSlide16

Refer to the Budget Office’s training document

http://www.fss.txstate.edu/budget/training/how-to-and-referenceSlide17

Let’s Reconcile!Slide18

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 completeSlide19
Slide20

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.Slide21
Slide22
Slide23

Step 3 – Current Period Activity

In SAP, run All Postings for applicable period.

(Transaction Code:

Z

FMRP_RFFMEP1AX

)

Subtotal results by Reference Document number to obtain totals by invoice, journal entry, etc.Slide24
Slide25

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.Slide26

Step 4 - Compare SAP current period records to department’s records

For visual ease, check off items in the SAP report and

matching department

record.

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.Slide27
Slide28

Step 5 – Investigate each Reconciling Item

Reconciling

items may or may not require

adjustments

in accounting records.Slide29

Reconciling ItemsSlide30

Common Reconciling Items

Timing Differences

$ Amounts are different

Incorrectly Coded Items

Missing ItemsSlide31

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.Slide32

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.Slide33

$

(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

.Slide34

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.

Slide35

Incorrectly Coded

Items

Possible coding errors:

Fund

Fund Center

Internal Order

General

Ledger CodeSlide36

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.Slide37

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. Slide38

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.Slide39

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.Slide40

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.Slide41

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. Slide42

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.Slide43

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. Slide44

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.Slide45

Reconciling Items from the Department’s Excel Record are added to the Reconciliation SummarySlide46

RECONCILIATION TEMPLATE

(

Can be found on Texas State Website under GAO-FR&A Forms)Slide47

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.htmlSlide48
Slide49

HELPFUL SAP T-CODES TO RECONCILE ACCOUNT

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_ENCUMBRANCESlide50

Typical Document Types

ZB – Budget Changes

RB – Cash Receipt Transactions

J* - Journal Vouchers

PA – Payroll Posting

RE / NP – Accounts Payable

PK – Pcard Transactions

* Represents a wildcardSlide51

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.Slide52

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.Slide53

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.Slide54

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.Slide55

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.Slide56
Slide57
Slide58
Slide59
Slide60
Slide61

Congratulations!!

You have successfully completed

Account

Reconciliation Training through

Texas

State University

.