Reconciliation of Financial Data

Reconciliation of Financial Data

What does it mean to reconcile? A reconciliation is simply a comparison of two sets of information as of the same point of time. Example: Identify the difference between what actually posted in the reporting system Finance Mart vs. what you actually posted in accounting systems like FAST or Bull Marketplace. *Tip: A great source for reconciliation is Finance Mart, the official USF reporting system. Compare your departmental records to Finance Mart during your monthly reconciliation.* 2

Reconciliation Why reconcile? What should be reconciled? If you don’t reconcile, what happens?

Why Reconcile? Good internal controls and sound business practices necessitate the reconciliation of funds by business staff USF needs assurance that all assets are safeguarded and used to the best benefit of the university 4

What should be reconciled? Budget Any type of funding Cash Auxiliaries / Sponsored Research Expenditure Any type of funding Encumbrances (PO’s) Any type of funding Pre-Encumbrances Any type of funding Interdepartmental Billings Any type of funding Travel Authorizations Any type of funding Travel Expense Reports Any type of funding Expenditure Transfers Any type of funding Payroll Expense Transfers Any type of funding Customer Billings Auxiliaries Accounts Receivable Auxiliaries Inventory and Fixed Asset Any type of funding 5

If reconciliation is not done, what happens? Errors, missing funds, and theft If you don’t look at all, you will never know Errors are more difficult to correct as time passes Poor Decisions If your books are inaccurate, you will make poor decisions and recommendations This is costly It can cost your department money and/or budget It reflects poorly on your department It could reflect poorly on you 6

Separation of Duties Separation of Duties Chart What to do if you cannot separate duties Who should not reconcile

Separation of Duties Chart 8

What to do if duties cannot be separated If you cannot clearly separate duties as prescribed by good business practices: Have another department in your college or unit provide a secondary level of review Departments can reciprocate by providing secondary review of each others reconciliations The PI is the accountable officer for projects Who should not reconcile? Ideally the reconciler should not be a person who has responsibility for: Creating a PO or buying with a PCard Approving purchases Recording the receipt of vendor items in FAST Approving payroll actions Handling cash 9

During Reconciliation What to look for during reconciliation Simple Steps Systems and Resources

What to look for during reconciliation Salary expense: Expense is charged to correct chart field strings Look for duplicate payments or unknown employee names The amount is correct The payroll distribution percentage is correct Individual staff may be paid from more than one funding source For salary: Confirm that PETs (payroll expenditure transfers) have cleared and posted correctly Review leave payouts If you have a question about benefits charges, contact USF HR Watch out at the end of the fiscal year; the last payroll period of June may include one or more days that will be accrued to July (the next fiscal year); however this is not true for FY 2016 11

What to look for during reconciliation Operating expense: Expense is charged to correct chart field strings Interdepartmental billings have been correctly recorded Travel expense reimbursements have been correctly recorded Non-payroll expenditure transfers have been posted correctly PO’s and requisitions verify: All requisitions have processed; PO’s have been issued If partial payments have been made, the encumbrance balance is correct Encumbrance is recorded to the correct chart field string All change order requests have been posted PO’s for which final payment has been made have closed and have a zero balance 12

What to look for during reconciliation Revenue verify: Outside sales/revenue has been recorded to correct chart fields The revenue on your department will appear with a 44xxx account code Interdepartmental billings have been recorded to correct chart fields The revenue on your department will appear with a 74xxx account code Revenue amounts are correct; matching departmental records All invoices in FAST Billing, whether paid or outstanding, reconcile to departmental point of sale records All revenue and/or AR adjustments have been correctly posted Revenue has been credited to both the AR module (subsidiary ledger) and the General Ledger Correcting entries from previous reconciliations have posted 13

What to look for during reconciliation As payments are received and applied to AR verify: Payments are applied to correct customers and invoices Outstanding invoices are actually unpaid Was the payment applied in another way? Was the invoice created by error? Outstanding invoices are collectible Is the customer still in business? Cash entries verify: All deposits sent to the Cashier have been posted Payments received directly by Cashier are posted to the correct customer Correcting entries from previous reconciliations have posted Cash transfers (general ledger accounts 10xxx) 14

Simple Steps 1 Gather departmental source documents 2 Run reports from Finance Mart (FM) 3 Review outstanding items from prior month 4 Compare source documents to FM reports 5 Identify anything that did not clear 6 Identify errors 7 Balance 8 Research outstanding items and errors 9 Prepare documents to correct all errors 10 Sign and date the reconciliation 11 Have a supervisor sign and date reconciliation For grants the PI is the appropriate supervisor to approve the reconciliation 15

System and Resources The primary USF sources Finance Mart reports (the official USF reports) GEMS (salary detail information) OASIS (for detail of student related transactions FAST modules (accounts payable, travel, purchasing) Your departmental source documents Your (departmental) original source documents Manually kept subsidiary ledger 16

System and Resources What about a format? You may use whatever format serves you best But be consistent and reconcile at least monthly We do offer options on the Controller’s Office web site A spreadsheet designed specifically for research grants A spreadsheet designed for paperless reconciliation 17

Finance Mart Finance Mart Reports Balancing

Finance Mart Reports RSA Summary Reconcile Budget – suitable for any funding source Financial Report Summary Reconcile Expenses and Revenue – suitable for auxiliaries and sponsored projects Balance Sheet Summary Reconcile Cash and Accounts Receivable – suitable for auxiliaries and sponsored projects Encumbrance Summary Reconcile PO’s and Requisitions – suitable for any funding source Expense Detail Reconcile Expenses and Revenue – suitable for auxiliaries and sponsored projects Revenue Detail Reconcile Expenses and Revenue – suitable for auxiliaries and sponsored projects Budget Detail Reconcile Budget – suitable for any funding source Balance Sheet Detail Reconcile Cash and Accounts Receivable – suitable for auxiliaries and sponsored projects Encumbrance Detail Reconcile PO’s and Requisitions – suitable for any funding source 19

Balancing Ensure that you have found all reconciling items All outstanding items All errors Total all of the reconciling items Does the total equal the difference between your balance and the balance in Finance Mart? 20

Possible Accounting Issues How to resolve accounting issues Minimize surprises

How to resolve accounting issues If there are a list of outstanding items and errors Plan how to track down the outstanding items Find out if more information is needed Maybe the document should be re-submitted Maybe support documentation is missing Vendor claims they have not been paid Lookup vendor payment info in AP/Voucher Navigation in FAST: Accounts Payable/Review Accounts Payable Info/Vouchers/Voucher You will see: The check number The date the check was issued If the check has been cashed (Reconciled) The date check was reconciled 22

Possible Situations Expense paid from wrong chart fields Correct with a non-payroll expenditure transfer Find the form on the General Accounting Forms page Expense failed budget checking Allocate budget to the chart field string Change the chart field string Residual balance on a PO Need to submit a change order to close PO Look on the Purchasing web site 23

Possible Situations Look for partially matched Pos and receipts Close a partially received PO if: Nothing is owed to the vendor and nothing more is expected If the PO is described as “Received-to be matched” Send a close request or a change order to Purchasing Travel expense has not appeared as paid Look at the travel expense report pending actions Navigation is: Employee Self Service Travel and Expense Center Expense Reports View 24

Possible Situations Deposit issues – wrong chart field string If recorded to wrong chart field string, submit a cash correction on a journal entry form (Excel spreadsheet template) But be careful AR payments must be linked to an invoice number This must be done through the Cashier Office Sometimes payments are recorded with a chart field string but should be linked to an invoice – talk to the AR Office 25

Minimize Surprises Remember Transactions will stall if there is insufficient budget True for both expense and revenue transactions Be careful how you search for data Search all operating units Grant transactions will stall If the grant project has closed If there is insufficient budget If there is no budget 26

Submitting your Reconciliation Sign and date the reconciliation Supervisor(s) review and sign

Sign and Date the Reconciliation Gather all of your documentation The Finance Mart reports Your list of outstanding items Your list of errors Your plan to correct the errors Sign the reconciliation form Date the form Bind all of these documents together 28

Supervisor(s) Review & Sign Give the documentation package to your supervisor They will review method and documentation They will sign and date the reconciliation File the documentation package in a safe place 29

The University Controller’s Office Resources Contacts Additional Information

Helpful Resources Email Department [email protected] Accounts Payable Help [email protected] Asset Management Help [email protected] Billing and AR Help [email protected] Cashiers Office Help [email protected] Electronic Media [email protected] Finance Mart Questions [email protected] Payroll Questions [email protected] PCARD Questions [email protected] Travel Questions [email protected] Purchasing Help 31

Online Business Processes The address is www.usf.edu/businessprocesses Allows for keyword search or category search You may pose questions Look for information on Accounting practices HR-payroll Purchasing Research The USF Foundation And many other subject areas Look for the TRAIN The Research Administration Improvement Network www.research.usf.edu/train The Goals Building the knowledge base of research administrators Enhancing professional competencies Improving business processes and reporting 32