1. Reconciliation Best Practices
Tricia Cook
Business Manager
Montana Manufacturing Extension Center

2. What Does “Reconcile” Mean in Accounting Terms?
In accounting, reconcile means to compare two sets of records to make sure they are in agreement
Most common type of reconciliation that most people are familiar with is a bank reconciliation where you compare a bank statement to your own records
At MSU, most of us will be reconciling our departmental financial records to Banner

3. What is the Purpose of Doing Reconciliations?
Verify accuracy of transactions
Identify and resolve errors in a timely manner
Confirm accuracy of fund balances
Maintain integrity of University’s accounting records so the information can be relied on for decision making
Ensure compliance with university, state and federal regulations, circulars and cost accounting standards

4. How Often Should Reconciliations be Done?
Normally, departmental funds should be reconciled monthly
Special circumstances such as very high volume or high risk activity may require more frequent reconciliations
Must balance effectiveness and efficiency

5. Who Reconciles and What is Required?
Reconciling should be performed by someone with sufficient knowledge to:
Compare transactions appearing on financial reports to departmental records
Identify, investigate and resolve any unknown or unexpected transactions
Identify and correct coding errors, such as erroneous account codes

6. Who Reconciles and What is Required (cont.)?
Identify expected transactions that have not yet occurred and resolve problems
Report irregularities to appropriate authorities

7. How to Segregate Duties?
“Significant transactions” should not be controlled from start to finish by the same person
Significant transactions are large dollar amounts and transactions that are inherently more risky, such as cash handling and p-card transactions
Separating responsibilities for revenue collection and/or bill payment from reconciling is one way to accomplish segregation of duties
If not possible, strong review procedures are necessary

8. What Departmental Financial Records are Needed?
Source documents supporting initiation and approval of transactions
Cash receipts, invoices
P-Card reports, BPAs, Corrections
Purchase Orders, Contracted Services Agreements
Hospitality Forms, Travel Authorizations
CatBooks/AgBooks, Quicken, QuickBooks, etc.

9. What Banner Finance Reports are Used?
Also know as SAIS Finance Reports, MSU SwitchBoard Reports, etc.
Use your Banner User ID and Password to login

10. Finance Reports for Reconciling General Ops
Run by fiscal year, index and month
Operating Ledger Summary
Operating Ledger Transactions
Payroll Report
Reconcile to the Budget, YTD Expenditures, and Encumbrances on the Operating Ledger Summary

11. Finance Reports for Reconciling General Ops

12. Finance Reports for Reconciling Designated Funds
Run by Index, fiscal year and month
Operating Ledger Summary – Banner Form FGIBDST
Operating Ledger Transactions – Banner Form FGITRND
Payroll Report – Banner Form NHIDIST
Run by Fund, fiscal year and month
General Ledger – Banner Form FGITBSR

13. Finance Reports for Reconciling Designated Funds (cont.)
Reconcile to the Budget (if applicable), YTD Expenditures and Encumbrances on the Operating Ledger Summary
Reconcile to the Cash in Treasury and/or the
Fund Balance on the General Ledger

14. Finance Reports for Reconciling Designated Funds (cont.)
Reconcile to the budget (if applicable), YTD expenditures and encumbrances on the Operating Ledger Summary
Reconcile to the Cash in Treasury or the Fund Balance on the General Ledger

15. Finance Reports for Reconciling Designated Funds (cont.)
Reconcile to the budget (if applicable), YTD expenditures and encumbrances on the Operating Ledger Summary
Reconcile to the Cash Balance or the Fund Balance on the General Ledger

16. Finance Reports for Reconciling Grants
Run by Index, fiscal year and month
Inception to Date – Banner Form FRIGITD
Operating Ledger Transactions – Banner Form FGITRND
Payroll Report – Banner Form NHIDIST
Reconcile to the Budget, ITD Expenditures and Encumbrances on the Inception to Date report

18. Other Helpful Finance Reports
Operating Ledger Transactions (FY) Operating Ledger Transactions ITD Operating Ledger Transactions (Month by Month) Payroll Report (FY) Payroll by Index or Org Encumbrance Detail Salary

21. Who Should Review Reconciliations and What is Required?
Performed by someone with sufficient responsibility and authority to:
Ensure reconciliations are completed in a timely manner and errors are satisfactorily resolved
Review and evaluate fund activity and balances
Principal investigators should review their grant reports
Department head is ultimately responsible

22. How are Reconciliations Documented?
Need to maintain a record of:
When reconciliation was done and by whom
Resolution of any errors
Proof of review by supervisor, principal investigator, department head, or whatever makes sense in your organization

23. Who to Contact with Questions?
Your HR Payroll Tech regarding salary, benefits and payroll encumbrances
regarding revenue transactions, BPAs, P-Card transactions, account codes, etc.
The originating department regarding auto-bills
The Budget Office regarding general operating or designated budgets
Your OSP fiscal manager regarding budgets and allowable costs on grants

24. Questions and Discussion??