MCSJ Bank Reconciliation

_____________________________________________________________________________________ MCSJ Bank Reconciliation What is a Bank Reconciliation? A bank reconciliation or bank rec is a report used to check and explain the differences between the cash balance in a company’s accounting ledger and the bank statement balance. Why are they important? The purpose of preparing a bank rec report is to detect any discrepancies between the accounting records of an entity and the bank, aside from normal timing differences. Such discrepancies may exist due to a timing difference on the part of the organization or the bank. They may also exist due to the careless or illegal activity on the part of the organization. This is one of the main methods to prevent fraud and embezzlement of the organization’s funds. It is common for the bank balance on the organization’s accounting records (Book Balance) to differ from the actual balance per the monthly bank statement due to a timing difference. Certain transactions are recorded by the entity, but they do not get updated in the banking system due to possible lag in banking days. The same happens when a banking transaction occurs within the account, and was not posted to the organization’s accounting system. These differences are considered reconciling items on the Bank Reconciliation Report. Benefits of a Bank Reconciliation. Proper handling of a bank rec helps in the identification of errors in an organization’s accounting records or in the bank account. Monthly preparation of a bank rec can assists in the vital monitoring of cash flows of an organization. Viewing of monthly bank statements help to ensure your financial institution is providing you with the correct fees and credits. Internal Control Functions A bank rec provides valuable internal control monitoring. Examples: • uncovering unauthorized bank withdrawals. • determining unreasonable turnover of cash. • separation of duties should be in place to NEVER allow someone who issues payments and performs deposits, to be the same who reconciles the cash accounts. ________________________________________________ 301 Tilton Road, Northfield, NJ 08225 P: 888.336.6999 | www.EdmundsAssoc.com Perform a Bank Rec in MCSJ FOUR PART PROCESS: • Check Reconciliation (AP Checks/PR Checks). • Compare Bank Rec Inquiry Report to Bank Statement. • Bank Reconciliation. • Print Bank Reconciliation Report. Necessary Items Bank Statement: Reflects all debits and credits going through your bank account. Bank Reconciliation Inquiry Report: Reflects all debits and credits going through your general ledger cash account. Outstanding Check Register: Reflects all disbursement not reconciled from a previous period. edmunds & associates 1. Make sure all transactions for the month in which you are trying to reconcile have been entered into MCSJ prior to reconciling: ** Note: Opening MCSJ general ledger cash account balances must be accurate for the bank reconciliation process to work properly. ** Note: Bank reconciliations should be performed monthly. Post Bank Interest (If Applicable) Finance > Revenue > Cash Receipts Batch Batch Date: Change the batch date to the end of the month in which you are reconciling. edmunds & associates . Enter the interest revenue account number, assign a source id and enter the interest amount. Click the SAVE button and then verify and update your batch. Post Bank Fees (If Applicable) Finance > Budget > Budget Batch Batch Date: Change the batch date to the end of the month in which you are reconciling. Enter the bank fees budget account number and enter the dollar amount. Click the SAVE button and then verify and update your batch. 2. Reconcile A/P Checks : Prior to entering the Check Reconciliation batch, a Check Register report should be run to compare with your monthly bank statement. Finance > A/P > Check Processing > Check Register edmunds & associates . Report Sequence: Select Check Date . Range of Check Dates: Enter a date range from the beginning of the fiscal year up to the end of the month in which you are reconciling. Checking Account: Fill in the checking account that you are reconciling. Report Type: Change to Outstanding Checks . Report Format: Change to Super Condensed Finance > A/P > Check Processing > Check Reconciliation . Checking Account: Select the checking account that you wish to reconcile. Reconciliation Date: Enter the last day of the month in which you are reconciling. There are two options as far as reconciling the A/P checks, you can either auto create the batch, or you can manually create your own batch. Auto Create Batch: edmunds & associates . When selecting Auto Create Batch and clicking the NEXT button, the system will generate a batch of all outstanding checks within the selected checking account equal to and prior to the reconciliation date that you enter. When using this method, you will need to DELETE any checks from the batch that are still OUTSTANDING or enter a 0 in the Date field. Everything in the batch when you click SAVE button will be reconciled. Manual Batch Entry: By selecting Batch Entry and clicking the NEXT button, the system will bring you into a batch entry screen, where you can then manually add in the checks that you wish to reconcile. With both the Auto Create and the Manual Batch Entry, once complete, you can click the SAVE button to save your batch. Clicking the CLOSE button will bring you back to the main Check Reconciliation screen, where you can then print the Verification listing and then click Update Batch and the NEXT button to reconcile and update your checks. 3. Bank Reconciliation Inquiry Finance > G/L > Bank Reconciliation > Bank Reconciliation Inquiry edmunds & associates This report will help you identify what transactions need to be reconciled – this report should be compared with the transactions on your bank statement. Report Type: Outstanding Transactions . G/L Account: Enter the account in which you are reconciling . Transaction Starting & Ending Date: Enter the dates up to the month in which you are reconciling. Check All Transaction Types other than Disbursements (since you have already reconciled those transactions in the A/P Check Reconciliation. 4. Reconcile G/L Cash Account Finance > G/L > Bank Reconciliation > Bank Reconciliation edmunds & associates There are two options as far as reconciling your G/L cash transactions, you can either auto create the batch (which is recommended), or you can manually create your own batch. Auto Create Batch: . When selecting Auto Create Batch and clicking the NEXT button, the system will generate a batch of all outstanding transactions within the selected G/L cash account equal to and prior to the reconciliation date that you enter. When using this method, you will need to DELETE any transactions from the batch that are still OUTSTANDING or enter a 0 in the Date field. Everything in the batch when you click SAVE button will be reconciled. Manual Batch Entry: . By selecting Batch Entry and clicking the NEXT button, the system will bring you into a batch entry screen, where you can then manually add in the transactions that you wish to reconcile. With both the Auto Create and the Manual Batch Entry, once complete, you can click the SAVE button to save your batch. Clicking the CLOSE button will bring you back to the main Check Reconciliation screen, where you can then print the Verification listing and then click Update Batch and the NEXT button to reconcile and update your transactions. Once all transactions have been reconciled, both A/P Checks and G/L transactions, you are ready to run the G/L Bank Reconciliation Report. 5. G/L Bank Rec Report Finance > G/L > Bank Reconciliation > Bank Reconciliation Report edmunds & associates G/L Account: Cash Account in which you are reconciling Bank Statement Ending Balance: Taken right from your bank statement Reconcile Date: Last day of the month in which you are reconciling . When clicking the NEXT Button, the system will generate a report starting with your Bank Ending Balance, then add in any Deposits in Transit or Other Adjustments and subtract any Outstanding Checks to come up with your Adjusted Bank Balance. The Bank Reconciliation report will then compare the calculate Adjusted Book Balance to your actual Book Balance to come up with the difference, which should be 0.00. edmunds & associates In the Event that the Difference is not Zero: Run the Bank Reconciliation Inquiry Report (Finance > G/L > Bank Reconciliation > Bank Reconciliation Inquiry) first for Reconciled Transactions and then for Outstanding edmunds & associates Transactions. Compare these figures with your actual Bank Statement to determine any discrepancies. 6. Reconcile Payroll Checks: (If Applicable ‐ Must have MCSJ Payroll) Prior to entering the Check Reconciliation batch, a Check Register report should be run to compare with your monthly bank statement. Personnel > Reports > Check Register History Report . Range of Check Dates: Enter a date range from the beginning of the fiscal year up to the end of the month in which you are reconciling. Check Types To Include: Uncheck the Adjustment and 3rd Party Sick Pay selections . Status To Include: Uncheck the Void and Reconciled selections Personnel > Payroll > Checks > Check Reconciliation edmunds & associates . Checking Series: Select the check series that you wish to reconcile. Reconciliation Date: Enter the last day of the month in which you are reconciling. Check Dates: Enter a date range from the beginning of the fiscal year up to the end of the month in which you are reconciling. There are two options as far as reconciling the PR checks, you can either auto create the batch, or you can manually create your own batch. Auto Create Batch: . When selecting Auto Create Batch and clicking the NEXT button, the system will generate a batch of all outstanding checks within the selected check series equal to and prior to the reconciliation date that you enter. When using this method, you will need to DELETE any checks from the batch that are still OUTSTANDING or enter a 0 in the Date field.

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