Account Reconciliation Training

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Account Reconciliation Training
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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.

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What is an account reconciliation?

• Process of comparing information
• Analyzing differences
• Making corrections
• Consistent data

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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 corrected

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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,

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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 departments records.

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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 departments support staff, but reviewed
  and approved by the account manager for proper
  segregation of duties.

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When should account reconciliations be prepared?

• Departmental account reconciliations should be
  prepared monthly.
• All postings in SAP will be complete by the 10th
  of the following month, with the exception of
  Restricted funds.

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Where should account reconciliations be kept?

• Evidence of reconciliation, and its completion,
  along with supporting documentation, should be
  maintained in department offices.

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How long should account reconciliations and
support documentation be retained by the
department?
Per Universitys Retention Schedule for Financial
Documents Fiscal Year End 3
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Types of Transactions
The department should maintain support
documentation for each of these types of
transactions for reconciling purposes.

1. Budget changes and carryforwards
2. Encumbrance transactions
3. Expenditure transactions
4. Revenue transactions

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What is Support Documentation?

1. Budget changes and carryforwards budget change
   forms, or documentation of budget at beginning of
   fiscal year
2. Encumbrances small purchase orders,
   departmental purchase requisitions, purchase
   orders, travel applications, etc.
3. Expenditures invoices, report of phone charges,
   packing slips, travel vouchers, receipts, etc.
4. Revenue deposit receipts, etc.

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What reports should I use in SAP to reconcile our
departments 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.

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Refer to the Budget Offices training
documenthttp//www.fss.txstate.edu/budget/traini
ng/how-to-and-reference

• How To Instructions for Budget to Actual Report

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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_RFFMEP1AX

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Refer to the Budget Offices training
documenthttp//www.fss.txstate.edu/budget/traini
ng/how-to-and-reference
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Lets Reconcile!
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Step 1 Gather Source Documents and Prior
Months 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
  complete

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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.
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Step 3 Current Period Activity

• In SAP, run All Postings for applicable period.
• (Transaction Code ZFMRP_RFFMEP1AX)
• Subtotal results by Reference Document number to
  obtain totals by invoice, journal entry, etc.

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SAP-ALL POSTINGSZFMRP_RFFMEP1AXResults 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.
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Step 4 - Compare SAP current period records to
departments records

1. For visual ease, check off items in the SAP
   report and matching department record.
2. Add the month cleared, document number and dollar
   amount paid in the columns to the right of your
   running balance on the Departments Excel Record.
   The unchecked items on both set of records
   represent your reconciling items.

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Step 5 Investigate each Reconciling Item

• Reconciling items may or may not require
  adjustments in accounting records.

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Reconciling Items
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Common Reconciling Items

• Timing Differences
• Amounts are different
• Incorrectly Coded Items
• Missing Items

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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.

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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.
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(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.

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Difference in Amount Example

• eIDT posted to your account charging for 3.5
  hours of police work _at_ 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 departments records.

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Incorrectly Coded Items

• Possible coding errors
• Fund
• Fund Center
• Internal Order
• General Ledger Code

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Incorrectly Coded Item Example

• Expense amount of 125.00 matches in SAP and your
  departments 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.

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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.

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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 initiators department so that they
  can process an eIDT AP invoice correction in SAP
  to fix the fund / fund center.

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Missing Items

• Missing items can occur in either SAP or your
  departments 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.

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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 departments 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.

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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.
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Review for Proper Approval
During the course of reconciling, the reconciler
must make certain that each transaction has
proper approval given by the departments 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.
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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
  months 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.

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Step 6 Reconciliation Report
The reconciler should provide the completed
reconciliation report to the departments 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.
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Reconciling Items from the Departments Excel
Record are added to the Reconciliation Summary
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RECONCILIATION TEMPLATE(Can be found on Texas
State Website under GAO-FRA Forms)
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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 FRA Texas State
  Website _at_
• http//www.txstate.edu/gao/Forms.html

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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_ENCUMBRANCE

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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 wildcard

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SAP-ALL POSTINGSZFMRP_RFFMEP1AXResults 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.
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SAP-ALL POSTINGSZFMRP_RFFMEP1AXResults 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.
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SAP-ALL POSTINGSZFMRP_RFFMEP1AXResults 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.
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SAP-ALL POSTINGSZFMRP_RFFMEP1AXResults 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.
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SAP-ALL POSTINGSZFMRP_RFFMEP1AXResults 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.
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Congratulations!!
You have successfully completed Account
Reconciliation Training through Texas State
University.